Caravan Wealth Management : Commodity Options

Summary

Caravan Wealth Management is a commodity trading advisor firm based in Miami, Florida which focuses on trading options to diversify and increase the probability of profit. Caravan clients are based in the United States and Latin America.

Caravan Wealth Management does not charge clients with a management fee based on the amount of funds under management, and only charges 25% incentive fee of the quarterly profit calculated with the high-water mark system.

Investment Strategy

The primary investment objective of the CARAVAN TRADING SYSTEM is to collect premiums from writing options on the S&P 500 index mini futures (/ES) and certain commodities futures such as Crude Oil, Natural Gas, Soybeans, Corn, Wheat, Coffee and Cocoa. The Trading Advisor intends to implement an options trading strategy through writing (selling) call and put option contracts. Writing Options on the S&P Mini Futures and commodities: The Trading Advisor intends to implement an options strategy that initially determines the near-term trading range for the S&P 500 Index, based upon the previous 3-6 months movement and for the commodities based on worldwide seasonality and supply / demand situations. A variety of indicators are used including 20, 50, 200 day moving averages, relative strength indicators, VIX, open interests, linear regression analysis among several others. Many other non-market indicators are also considered, including political and macroeconomic events. Generally, options are written near the peak (calls) and the troughs (puts) of the market with 5% probabilities of being in the money at expiration. Options Contracts are for a set period of time generally between 60 and 90 days before expiration. In order to maintain high probability of profit and maximize number of events, options are written every other week for S&P 500 mini futures and once a month for commodities.

Risk Management

The option expiration time frame varies from 60 to 180 days, and they are generally bought back when 80% of maximum profit is reached to secure profits and leave margin available for the next trade.