Pukula & Co. : YOOF

Summary

The YOOF program is a variation of the YES OO trading program that substitutes the use of futures contracts for the cash treasury securities. The objective of the yield enhancement strategy is first, to increase the client’s yield using conservative techniques involving derivative product, and second, to protect the asset value of the underlying portfolio.

Investment Strategy

The Oblique Option System which is used is a trend-countertrend system employing option credit spreads and outright options. Its’ proprietary methodology takes advantage of both option decay and short term market spikes while enjoying limited liability on every trade. The YOOF program uses futures contracts instead of the cash treasury bonds as the underlying asset to write call spreads against. Due to the lack of interest income from the bond, it is expected to yield a lower rate of return than the original program. Also, the lack of this income component should result in a significantly altered risk to reward relationship.

Risk Management

Like the YES OO program. The YOOF program does not take any naked short option positions. Any shorts are only part of a spread with an offsetting long position. The maximum loss per trade is the difference between the two option strikes of the spread or the full price paid for the outright option. In most cases this risk is generally not more than $2,000 per spread position.