discretionary managed account

Discretionary Managed AccountLEWIS CHARLES DISCRETIONARY OPTION

MANAGEMENT PROGRAM (LCDOM) WITH OPTIONAL CAPITAL PROTECTION

TARGETING HIGH RETURNS FROM TRADING OPTIONS

WELCOME TO THE AISA GROUP

Cornel Sampson

[email protected] 00420 361 850

Mobile +44 7967 801 550

mailto:[email protected]

http://www.linkedin.com/profile/view?id=41087086&trk=tab_pro

Summary• High returns can be captured through selling (also known as “writing”) options• Both call and put options are sold to enhance returns and reduce risk• A limited number of options are traded• Risk is actively managed• Hedging overlay is available to reduce risk further• Optional capital protection is also available


What’s the concept behind the options Strategy When an average investor BUYS a call option* he is hoping that the share price rises

significantly at the option expiry (in typically 1 or 2 months) to make a good profit but there are three possible outcomes:

1. Securities price does rise: he does make a profit2. Securities price remains broadly unchanged: the call option expires worthless and

he makes a loss equal to the purchase cost of the call option (the option “premium”)3. Securities price falls: again he makes a loss Therefore on a pure “random walk” basis, there is a 2 out of 3 chance the

average investor will make a loss. HOWEVER since we are SELLING(also known as writing) call options, the LOSSES

made by the investor above will be our PROFITS So there is a 2 OUT OF 3 CHANCE WE WILL MAKE A PROFIT

* Note: It is assumed an “out-of-the-money “ call option is bought


If we then also sell put options....Through selling both call and put options with strikes above and below the current securities price we can:1. Enhance returns (since more premium income is received)2. Reduce risk (against adverse price movements)


How are returns produced? Taking the FTSE100 Index trading at 5,400 in May

this year as an example:1. We could have sold a July call option at a strike

price of 5,800 for 20 in cash2. We could have sold a July put option at a strike

price of 4,400 also for 20 in cash3. Since the Index level at expiry was in the

“tramlines” 4,400 to 5,800 at expiry of the options the investor would have kept the 20+20= 40 in cash he originally received


FTSE100 Index example


Which options are traded?

Options are traded on the following underlying securities:

• FTSE100 Index• FTSE 100 shares• Gold• Crude Oil (WTI)• Euro v US$


How is risk minimised?• The highest profit is achieved if the price of the

underlying security is between the “tramlines” (strikes of the call and put) at the expiry of the options

• The Lewis Charles’ trading team will therefore advise on moving the pair of strike prices of the options either higher or lower in order to maintain the securities price between the two strikes

• In this way, there is a effort to manage the put and call option positions to be worthless at expiry, thus capturing the highest profit


What happens in the worst case scenario?

• Lewis Charles believes that it is unlikely but not impossible to lose more than your initial subscription in a “black swan” event

• This is where there is a very sharp move in the underlying securities prices before Lewis Charles can react by moving the option strike prices

• The potential losses are amplified because the options are so-called “margin traded”

• To mitigate this risk you can opt for a hedging overlay which should protect you from losing more than your cash subscription but will likely reduce targeted returns from around 100% per annum to around 30% per annumWELCOME TO THE AISA GROUP

How does capital protection work? By splitting your cash subscription between

options trading and the purchase of a bank corporate bond, your capital can be fully or partially protected. Bank bonds are currently available from the following issuers:

• Lloyds TSB• NatWest• RBS


Aisa InternationalThe philosophy of business: to assist clients in successfully managing their capital, to safeguard it and to make investments. Aisa International is a financial services company, licensed and regulated in the Czech Republic by the Czech National Bank. It is also a member of AFIZ (Association of Financial Advisers and Mediators of Czech Republic).

It has an office in Prague, and is the sister company of Aisa Professional (UK). The aim of Aisa International is to work throughout Central and Eastern Europe with discerning individuals and companies who require the expertise and knowledge of professional UK trained and qualified financial advisers. Aisa International is able to offer these services to private individuals, businesses and institutional investors such as government and state bodies.


Contact information

For more information please contact Cornel Sampson

[email protected] 00420 361 850 Mobile +44 7967 801 550


mailto:[email protected]

http://www.linkedin.com/profile/view?id=41087086&trk=tab_pro

discretionary managed account

Economy & Finance