Freedom Capital Advisors

LOWS(Levered Options Writing Strategy)



  • Strategy Options
We take a value approach to investing and try not to overpay for anything.  Our discipline is buying good large cap companies at reasonable valuations and selling puts underneath as a means to initiate positions and create income.  Companies are scrutinized closely and we look at earnings, cash flow, debt, and market cap as well as many other metrics. Often we initiate positions in companies that we have followed for many years and have invested in many times in the past.
We typically are looking at large, dominant Fortune 500 type companies who have attractive valuations.  The LOWS strategy involves selling out-of-the-money puts on companies we would like to own and that involves shorter-term options as well as long-term options.  If put the stock, often we will sell covered calls to reduce our risk further.
Most positions we initiate are in stocks and companies we are familiar with and have read through quarterly earnings reports(10-Q) and annual reports(10-K’s) as well as current news.
The portfolio consists primarily of short options positions (naked puts) and long stocks and covered options positions.  Careful consideration is given to not overweight in any one stock or sector.  There are usually between 10 to 30 companies in the portfolio at any one time and typically a handful of options and strike prices on any one position, typically puts and covered calls.  Our goal is to maximize returns using leverage and employ a “walk before we run” approach.
We would sell a position if the company’s outlook and fundamentals deteriorated and we felt like it would take too long to recover.  Often we will “roll” a position if necessary to lower our cost and reduce risk along with selling an “in the money” covered call.

Performance

4.5%

Month to date

MTD

4.5%

Quarter to date

QTD

4.5%

Year to date

YTD

Quarterly vs S&P500

Quarterly vs S&P500

Risk score

  • 8.9%

    Best quarter

  • 2.0%

    Worst quarter

    • 1.25% fee
    • $28,000 min
  • Required: Margin account
  • Required: Options trading permission

Performance detail

Performance history disclosure

Performance Portfolio inception December 09, 2015

as of January 17, 2017 Manager (net of fees ) S&P 500
Month-to-date 4.5% 1.3%
Quarter-to-date 4.5% 1.3%
Last 365 Days 47.7% 20.6%
Since inception (Annualized) 29.2% 8.9%
2017 (YTD) 4.5% 1.3%
2016 25.9% 9.5%

Risk metrics Last 365 days

as of January 17, 2017 Manager (net of fees ) S&P 500
Volatility 24.6% 12.2%
Sharpe Ratio 1.92 1.65
Sortino Ratio 2.38 2.29
Maximum Drawdown -14.7% -5.7%
Value-at-risk (95%, 1 week) -5.7% -2.8%
vs. S&P 500
Information Ratio 1.55
Alpha 12.5%
Beta 1.51
R-Squared 0.56

Exposure

10.2%
-2.4%
  • Basic Materials
  • Equity Option

Portfolio commentary

  1. Profile Picture Seeking market calm December 12, 2016

    Let the market settle down before getting too bullish or bearish

  2. Profile Picture Xmas rally pivots December 05, 2016
  3. Profile Picture Tesla's reality shock September 01, 2016
Show more

Latest transactions Average trades per month 6.1

Executed Symbol Security Type Price
January 11, 2017 BMY 170616P00047000 BMY Jun 16, 2017 47 Put Sell short $0.72
January 10, 2017 DUK 170421P00070000 DUK Apr 21, 2017 70 Put Sell short $1.01
January 06, 2017 TGT 170421P00060000 TGT Apr 21, 2017 60 Put Sell short $0.58
December 28, 2016 WMT 170317P00060000 WMT Mar 17, 2017 60 Put Sell short $0.33
December 21, 2016 F 170120P00011500 F Jan 20, 2017 11.5 Put Sell short $0.05
December 21, 2016 VOD 170721P00020000 VOD Jul 21, 2017 20 Put Sell short $0.44
November 30, 2016 XOM 170721P00065000 XOM Jul 21, 2017 65 Put Sell short $0.77
November 29, 2016 GSK 170519P00032000 GSK May 19, 2017 32 Put Sell short $0.55
View all

Important Information

  1. Past performance is no guarantee of future results.
  2. Performance of the Portfolio Manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions and reflects the deduction of broker commissions. Manager returns include trades and positions that fail Covestor's trading rules, as a result, actual client returns will differ. Covestor advisory fees are simulated and applied retroactively to present the portfolio return "net-of-fees".
  3. Average client returns are calculated by Covestor and are composed of the asset-weighted daily average returns of all active client investments (some of which may contain investment restrictions) to the underlying portfolio. These daily average returns are then linked together for the timeframe presented. These returns include cash, dividends, and earnings distributions, and reflect the deduction of Covestor advisory fees, brokerage and other commissions and expenses actually paid by clients.
  4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The investment minimum is the minimum investment required to follow a particular portfolio. The minimum amount is determined by Covestor, based on the characteristics of the underlying portfolio. It should not be considered as specific investment advice for your investment situation.
  5. The performance charts are provided for informational purposes only, and should not be used as the basis for making an investment decision. We rely on mathematical formulas, computer programs, and pricing information from third-party vendors to provide these returns. Neither Covestor nor any of its data or content providers shall be liable for any errors in this information or any actions taken by you in reliance upon this information.
  6. Benchmark returns displayed have been calculated by Covestor using daily benchmark prices and do not include dividend income. More information here. For certain portfolios Covestor uses an index as a benchmark, while for others it uses an investable exchange traded fund (ETF) as a benchmark. Index returns do not reflect the deduction of any management fees, transaction costs or expenses. Individuals cannot invest directly in an index. Investable ETF returns reflect the deduction of (i.e., are net of) management fees, transaction costs and expenses.
  7. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.
  8. All Portfolio Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Portfolio Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history of Portfolio Managers is available upon request. Portfolio classifications are provided by Covestor, and are intended to serve as a general guide.
  9. Not all transactions listed will appear in accounts due to Covestor's trading rules and individual client constraints. Eligibility of these securities is monitored periodically, and may change over time. Actual client investment holdings may vary.
  10. This portfolio was launched on Covestor on July 19, 2016. Returns history prior to launch is derived from account position valuation and cash flow data at Interactive Brokers. Covestor has not reviewed this performance data but has received manager certification that it adheres to the current strategy.
  11. This portfolio contains options. Options trading involves a high degree of risk, is highly speculative, and is not suitable for all investors. You should only select a portfolio with options trading if you are comfortable with the level of risk involved in trading options.
  12. This portfolio uses short selling. Short selling is more complex than simply owning securities, involves a high degree of risk, is highly speculative, and is not suitable for all investors. The risk of loss associated with short selling is virtually unlimited. Short selling may also involve additional expenses and risks, including hard-to-borrow stock charges and buy-in risk. You should only select a portfolio using short selling if you are comfortable with the level of risk involved in short selling.
  13. This portfolio uses borrowed funds or leverage to fund investments. Leverage involves a high degree of risk, is highly speculative, and is not suitable for all investors. Leverage increases both the amount you may lose and the amount you may make in a portfolio, leading to higher returns in the case of favorable market movements but also larger losses under adverse market conditions. You may also incur additional expenses associated with borrowing funds. You should only select a portfolio using leverage if you are comfortable with the level of risk involved in using leverage.