Steward Trading Group, LLC : Premium Futures Option Program (Prop)

Summary

Steward Trading Group, LLC (STG) is a Commodity Trading Advisor (CTA) registered with the Commodity Futures Trading Commission (CFTC).

STG offers individuals and institutions an alternative investment choice complimenting their overall portfolio performance. STG's trading program - PREMIUM FUTURES OPTION PROGRAM (PFOP) is an option writing investment strategy that trades options exclusively in the Futures Commodity Market. STG's investments are typically not correlated with the traditional stock and bond markets, which as an alternative investment choice can result in a more diversified portfolio and provides opportunities for investments in non-traditional asset classes which could be attractive to many portfolios.

Investment Strategy

The Program "PFOP" is an option writing investment strategy that utilizes delta neutral and non-directional strategies. The intention is to sell far out-of-the-money puts and calls while taking advantage of time decay. We first evaluate the given price range of an underlying commodity futures contract over a specific period of time. Then we evaluate to see if, in our opinion, options on the underlying futures contract are being sold outside of our established range. The program uses a variety the risk controls including but not limited to: an analysis of margin, delta, rolling options, and we always keep open the possibility of hedging our positions with the underlying commodity futures contract we are trading. The Manager primarily sells (“writes”) deep out-of-the-money options (puts and calls) on commodity futures contracts. From time to time we may also purchase options if PFOP calls for us to do so. Purchasing options however is very rare and will almost always be done to reduce trading risks. PFOP will primarily trade options on the highly liquid commodity futures markets of grains, energy, softs, and metals.

Risk Management

STG uses an approach intended to profit in rising, declining and sideways markets by utilizing delta neutral and non-directional strategies. More specifically we intend to sell far out-of-the-money puts and calls while taking advantage of time decay. To do this we use proprietary techniques to evaluate what we believe the given price range of an underlying commodity futures contract may be for a specific period of time. Once we have conducted our analysis we will then evaluate if we believe options on the underlying futures contract are being sold outside of our established range. From there we use more than a dozen risk control strategies to consider whether or not we will sell options under the then present market conditions. Some, but not all of the risk controls we evaluate include: an analysis of margin, delta, rolling options, and we always keep open the possibility of hedging our positions with the underlying commodity futures contract we are trading.