Investing Methodology

Trading Description:

Financial Commodity Investments (FCI) utilizes a market neutral trading strategy that does not attempt to forecast market direction. FCI utilizes options on futures to initiate market neutral positions by simultaneously writing (selling) OTM call and put options, followed by appropriate adjustments based on movement of the underlying futures contract. Profits are derived when the price of the options that have been written (sold) declines such that the options can be purchased for amounts less than the price at which those options were initially sold. Profits also are realized when options expire worthless, providing full profit on the option premium sold (after commission and other fees). FCI's primary trading philosophy is for profits to be made when the value of options are reduced as a function of time, rather than a function of market direction.

Risk Strategy:

Due to the volatile nature of trading securities and instruments, Financial Commodity Investments (FCI) adheres to strict money management principals to increase the opportunity for success of the trading program. Position exposure and the potential percentage loss that the portfolio may incur in unfavorable market moves are continuously monitored. Volatility models are used to determine position size adjustments to maintain the programs maximum position exposure limits. Position exposure limits are the total equity risked in any one market, and is generally between 0.5% and 1.5% of total equity. An increase of the volatility model will cause a position size reduction in any particular market.