Institutional Services


You’ve done your research. You’ve found the best of breed. The stock is destined to double, quadruple, even go up ten fold. And you’re just going to buy the stock? Have you considered a variety of alternative strategies for playing your thesis?

Name a stock, any stock (with options), and I’ll give you at least 3 ways to play your thesis (long or short) with less risk, lower break-even points, and sometimes significantly higher upside than just buying or shorting a stock.

Services include:

strategy development for new and current positions
income generation from open positions
- underwater position recovery

Clients include:

- Hedge funds
– Investment Advisors
– Family offices
– High net worth individuals

The Service.  I provide strategies, income generation, or position management advice on up to 7 positions per month. Require advice on more than 7, no problem. Just contact me and we’ll work out an arrangement.

The Cost.  I don’t charge a percentage of assets under management or by the trade. I charge a simple, and reasonable monthly fee. If you’re an institutional investor, fund manager, investment advisor or private investor with at least a 500,000 portfolio, you’ll find that my $500/month fee is a mere drop in the bucket.


Here’s an example of my work:

Stock / Symbol: Valero Energy / VLO
Date / Price at workup: Mar 5, 2013 / $48
Trade Allocation: $1,000,000 or approximately 20,600 shares
Thesis: Manager wants long term investment in VLO for capital appreciation and dividend income.

Trade #1: Covered Call. Object is to generate effective monthly income of at least 1% while not subjecting the position to significant call exercise risk. The calls being sold have only a 14% probability of expiring ITM.

Trade Details :
BTO 20,600 shares VLO
STO -206 VLO Apr 55 Calls
for a max net debit of 47.70 per share
Max Risk: $982,620
Profit Range: $47.70+ by Apr 19
Max Reward: $150380 or 15.3% @ 55+ by Apr 19
Suggested downside stop: @ $40.49 = ($149,000) loss

Trade Scenarios:
1) Trading under $55 by Apr 19. Have captured an uncalled return of 0.75% in 45 days. If stopped out, loses are less than would have without selling the calls. Next, sell next month expiration calls at strike over 50, yielding at least .0.5%.
2) Trading at/over $55 by Apr 19. Have realized a 15.3% gain. If VLO is not trading much higher than $55, roll short calls to next month’s expiration to capture additional yield. If VLO is trading significantly higher than $55, consider closing half of the position and rolling the remaining calls to the next month’s expiration.

Trade #2: synthetic long stock. Object is to allow the thesis to mature over a 6 to 12 month period. If stock has retreated, losses would be less (by expiration) than if stock had been purchased outright. If stock has advanced, gains will be higher compared with straight stock position. At time of option expiration, the idea is to exercise the options, take the stock, and convert to a covered call strategy.

Trade Details:
BTO 206 VLO Sep13 25 Calls
for a max debit of $23.35 per contract
STO -103 VLO Sep13 40 Puts
for a min net credit of $1.75 per contract

Max Risk: $874,985
Profit Range: $47.50+ by Sep13 exp
Max Reward: unlimited
Suggested downside stop: $40 = ($154,000) loss by Sep13 exp / est ($180,000) loss prior to expiration
Suggested upside stop: NA

Trade #3: Covered Strangle. Object is to establish a cost basis that is 5 to 7% lower than the current price of VLO. Upon, option expiration, can either sell another strangle or convert to a covered call strategy. Due to the obligation to purchase additional shares should VLO be trading under the short put strike by option expiration, we’re starting out with 10,300 shares.

Trade Details:
BTO 10,300 shares VLO
STO -103 VLO Jun13 45 Puts
STO -103 VLO Jun13 55 Calls
for a max net debit of 44.60 per share

Max Risk: $918,760
Profit Range: $44.60+ by Jun13 exp
Max Reward: $107,100 or 11.6% @ 55+ by Jun13 exp
Suggested downside stop: @ $40.49 = ($107,000 to $89,000) loss depending on proximity to expiration

Trade Scenario(s):
– If the short calls are exercised due to the ex-dividend date, will immediately realize the full profit potential of the short calls. There will be a net zero gain/loss on the dividend. At such time, the short puts could be bought back to capture at least 65% of the profit potential or left in place till expiration.
– If VLO is trading under $45 by Jun13 expiration, will be obligated to purchase 10,600 shares at $45 per share (6.25% lower than current price).

Trade #4: Diagonal Call Spread with leaps . Object is to significantly lower cost basis, while risking / requiring half the capital to control 20,600 shares. While profits are capped, trade can make 29.8% return on just a 4.2% increase in the stock price. By Jan14 expiration, will have the option of closing the position, exercising the long calls, or selling near term calls.

Trade Details:
BTO 206 VLO Jan15 20 Calls
STO -206 VLO Jan14 50 Calls
for a max net debit of $23.10 per contract

Max Risk: $475,860
Profit Range: $43.10+ by Jan14 exp
Max Reward: $142,140 or 29.8% @ 50+ by Apr13 exp
Suggested downside stop: @ $40 = ($81,000 to $61,00) loss depending upon proximity to short call expiration.