Aurum Options Strategies : Aurum Options Strategies

Summary

Aurum Options Strategies offers a way to diversify your gold exposure. We employ a disciplined options spread trading program with a superior risk/return profile. The strategy endeavors to increase profit potential for a 'revaluation scenario' to the upside and mute volatility to the downside by closely monitoring premium outlays. Should gold experience a significant rally, those who own gold outright (physical or ETF) may profit less than those whose strategy is devoted in part to a constant positive net exposure through options. Aurum’s program often profits during sideways/down gold markets and potentially underperforms during modest rallies. In a phrase, we don't track gold. Our approach is an Absolute Return gold options strategy with Tail-Risk and Capital Preservation components. It offers leveraged exposure to gold as an ‘insurance policy’ while seeking to generate attractive uncorrelated, risk-adjusted returns.

Investment Strategy

One of the core drivers of our options program is valuation in context of a theoretically sound volatility surface. We pay close attention to the activities of major players and ascribe appropriate value to significant transactions. While the options market is quite efficient, retail order flow and the activity of price insensitive entities can bring areas of the volatility surface out of line. We initiate option spreads that take advantage of temporary inefficiencies in the market. As time passes, a reversion to a more sound volatility surface should turn theoretical profit into realized profit. In conjunction with spreads that generate theoretical profit, we are a natural buyer of wing options that carry attractive risk/return. Our mandate is to always be net long options. Over the long term, we are successful in our strategy if we can consistently own wing options and still generate a positive absolute return. We do not sell naked options. There is no unbound risk.