440 INVESTMENT STRATEGIES & OVERLAYS

INVESTMENT STRATEGIES

440 Premium Income

440 Premium Income is an absolute return overlay strategy that is designed to provide investors with income that is uncorrelated to the performance of their underlying investments held as collateral. The strategy uses the available margin on a portfolio to sell deep out-of-the-money call and put spreads on the S&P 500 index.

The strategy’s objective is to obtain a positive return in all market environments while minimizing the overall standard deviation of the strategy. Daily liquidity is available for subscriptions and redemptions with no lockup.

 

440 Managed Volatility

440 Managed Volatility is an absolute return strategy that sells out of the money put and call spreads, typically combined in an Iron Condor Strategy, with a short time to expiration. The strategy’s objective is to obtain a positive return in all market environments, while minimizing the overall standard deviation of the strategy. Daily liquidity is available for subscriptions and redemptions with no lockup.

 

440 Large Cap Income

The primary objective is to provide capital appreciation from investing in domestic equity securities augmented by income derived from option related strategies.

We believe this objective may be achieved by investing in large cap domestic equity securities that are currently trading below their intrinsic value, and in our opinion, are positioned to take advantage of long term growth opportunities. Additional income may be generated by option related strategies, such as covered calls.

CUSTOMIZED OVERLAYS

Customized Covered Call

A covered call strategy is owning an equity position and selling a call option against the equity position. The seller of a call option is offering to
sell shares at a predetermined price (the strike price) for a predetermined amount of time (contract expiration date). In return for offering to sell shares at a predetermined price, the seller will receive a cash payment (the premium) from the buyer of the call option.

 

 

Customized Collar

A collar strategy is the combination of selling an out of the money call option and purchasing an out of the money put option. Selling a call option will establish a ceiling value for a position and generates a positive cash flow. Buying a put option will establish a floor value for a position, but requires a cash outflow. The cash received from selling the call option will be applied to the cost of purchasing the put option. A collar strategy provides downside protection below the put strike price and reduces the cost of purchasing downside protection.

 

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