Davis Commodities, LLC : Davis Trading Program

Summary

The product is an agricultural based system which relies on the discretionary models built by Stephen Davis. The program will trade futures, options, and spreads. The CTA is 4.7 exempt.

Investment Strategy

The primary focus of the trading program is agricultural commodity markets with particular emphasis on soybean, soybean products, and corn futures and options, but does occasionally trade other markets. Mr. Davis develops trading strategies that may involve long or short futures positions as well as intra- and inter-market spread positions. Options are frequently used to manage risk exposure or generate additional opportunities. Technical or chart analysis is generally used only to help determine entrance and exit points, as Mr. Davis believes that fundamentals ultimately determine price movement.

Risk Management

Trades are reviewed on a daily basis in relation to leverage and margin to equity. One of the key philosophies of the trader is that positions must be justified every day. Once a trade has been placed, the entry price is not as important as the current market analysis. In other words, is the trade still working today and is there still a chance to profit from the trade. In addition to margin to equity, analysis of the net delta value of positions for each commodity is considered daily.