About CKP Finance Associates, AG – Masters Program

Summary: The CKP Masters Program is an option writing program that trades in the FX, softs, energy, metals, and treasury futures options markets. Equity indexes are not included in the program. The program trades in markets of sufficiently high or declining volatility. In range-bound markets CKP will generally just write wide strangles. In trending markets CKP will either write single options behind the trend, or will establish low risk, hedged ratio spreads that benefit from a continuing trend. When fundamental and technical analyses agree that a certain underlying commodity is range-bound, but moving in waves between support and resistance levels, biased strangles will be written. There will often be naked positions in the account however CKP uses stops at 2.5% of NAV or three times the initially collected premium (whichever is lower), on exposed positions, either on the option itself, or, at lower option liquidity, on the underlying commodity. Entry points are usually 4-6 weeks from expiration and exit points are determined by rate of return per day or stops. Trade decisions are 50% discretionary and 50% systematic as signals are analyzed with fundamental bias. In the conservative version no single position exceeds 10% of account equity. Margin to equity usage for the program is 50% initial and 38% maintenance which may spike to 55%. The largest intra-month drawdown was -8.7%
Management fees can range from 2% to 4% per year (typically 0.2% per month) or be replaced as decided by the client with a $1 per half turn commission. Incentive fees may range from 15% to 25% per month depending on the size of the account and the commission level. Clients can choose to have a 25% incentive fee with no management fee. There is no lock-up period. Dr. Klaus Schatz is the CEO and primary trader however there are 2 others that trade with him and can run the programs in his absence.

From DDoc:
The trading methods used in both, the options and the parallel futures trading accounts, are based upon both fundamental and technical analyses. The trading methods also use several common and proprietary stochastics and indicators. In the option account CKP primarily trades option strangles and spreads in several markets simultaneously. CKP rolls or covers short positions if the underlying commodity moves to a critical proximity relative to the strike price of the options. CKP looks predominantly at short range technical factors and patterns that affect the commodity prices over the near future. If a trend is discernible, short options behind the trend are sold or long options are bought in front of the trend and the other leg of a short strangle is entered only if and when the trend reverses. Short positions, usually, are entered at the time of maximum decay of the option’s time value. In strongly trending markets CKP may go long options or use spreads. Trading in the parallel futures account consists mostly of day-trading commodities without options.
From time to time, CKP may convert all commodity futures and options positions to cash or cash equivalents. The number of options traded in the options account of a particular commodity is based upon various factors including the target profit percentage for the current month, and further by margin requirements, volatility, liquidity, and trend behavior of the underlying commodity. The profit target determines the strike prices, entry and exit points and number of the option positions. Typically, the potential profit of a strangle decreases with increasing height (the difference between the strike prices of the call and the put) of the spread and with decreasing width (time between entry and exit) of the position. There is an inverse relationship between the profit target and the probability of attaining it. CKP has developed a probability correlation from which the profit target can be optimized. The decision not to trade certain commodity options for certain periods, or to reduce the number of contracts traded in a particular commodity, might result in missing a significant profit opportunity. However, such opportunity might be captured by the trading in the parallel futures account.
The trading principles and experience of CKP trading options, and of those of the CTA trading futures, are factors upon which the allocation of assets is based to be used for each of the two accounts and the size of the respective positions taken or maintained. Both traders may also decide to increase or decrease from time to time the size of an options or futures position, respectively, (long or short) .Such decisions require the exercise of subjective judgment and include consideration of the volatility of the particular futures market, the pattern of price movement, open interest, volume of trading, changes in option and futures prices, and overall portfolio balance and risk exposure. No assurance is given, however, that consideration of any or all of these items will be made with respect to every trade, or that consideration of any of the above in a particular situation will lessen the risk of loss.

This report does not take into account the investment objectives, financial situation, or particular needs of any particular person. Investing in securities and other financial products entails certain risks, including the possible loss of the entire principal amount invested. Certain investments in particular, including those involving structured products, futures, options, and other derivatives, are complex, may entail substantial risk, and are not suitable for all investors. The price and value of, and income produced by, securities and other financial products may fluctuate and may be adversely impacted by exchange rates, interest rates, or other factors. Prior to effecting any transaction in options or options-related products, investors should read and understand the current Options Clearing Corporation Disclosure Document, a copy of which may be obtained on request from your Managed Capital Advisory Group, Ltd. representative. Certain securities may not be registered with, or subject to the reporting requirements of, the US Securities and Exchange Commission or any comparable regulatory authority. Information available on such securities may be limited. Investors should obtain advice from their own tax, financial, legal, and other advisors and only make investment decisions on the basis of the investor’s own objectives, experience, and resources.