LOTUS INVESTMENT MANAGEMENT OPTION WRITING PROGRAM
The objective of this strategy is to achieve substantial capital appreciation through the speculative trading of options on futures contracts. This objective can entail a comparatively high level of risk. Lotus Investment Management
currently engages in this strategy of selling or "writing" put and call options on stock index futures in this strategy.
Lotus Investment Management may trade commodity future and option contracts on any United States exchange. As of this writing, only stock index futures and options thereon are used. In the future other commodity futures may be used as
well as the options thereon. Lotus Investment Management uses a systematic approach to trading, in that it relies heavily on a program of
selling or "writing" out of the money options. Lotus Investment Management may also, from time to time; purchase options to reduce risk exposure and/or purchase or sell the futures contract from which the option is derived to try to
reduce the risk of loss. The implementation of the program each month depends on a proprietary formula which determines the strike prices and maturity periods of the initial option positions, which are written for each month's expiration. Considerations are also given to technical and fundamental conditions in order to give the best risk/reward possible in then Advisor's opinion. Option contracts are written at a sufficient distance out of the money to allow, in most cases, for the options to expire worthless.
Returns are based on proforma adjustments to a proprietary account to reflect fees. Client accounts will be traded in like fashion.