About Financial Commodity Investments, Inc. (FCI)

Financial Commodity Investments, Inc. is located in the greater Washington D.C. Metropolitan area and manages several absolute return programs that have very low correlation to the equity, fixed income and real estate markets. Their alternative investment strategies are leveraged and seek to maintain high levels of liquidity. As a result of their asset management expertise in alternative investments, the managed futures accounts under their management have posted consistent returns over the past five years for their clients. FCI’s managed futures accounts offer liquidity, effective use of leverage, diversification and a non-linear absolute return program.

Trading Program Description
The goal of FCI is to achieve appreciation with the use of alternative investment strategies. FCI will attempt to obtain consistent quarterly returns that exceed those of the equity market and to protect capital against adverse market trends.

The primary trading strategy is to sell options on futures contracts however, FCI is different from other option selling programs as they utilize vertical credit and calendar spread strategies to reduce per trade capital requirements and therefore the risk. When premium collection transactions become unprofitable contracts, offsetting futures contracts or options are purchased as a hedge to limit further future contract losses. The net effect is that FCI targets higher returns with less volatility.

The implementation of FCI’s managed futures program depends on both technical and fundamental analysis. Technical analysis involves the study of charted prices, volumes, momentum, strengths, and moving averages to determine the future course of prices. Technical indicators also include the prices of various options, both in absolute terms in relation to their historic price level, and in relative terms comparing the prices of puts to the prices of similar calls. Fundamental considerations include the condition of the market, the trend and volatility of the markets, supply and demand, as well as business and economic factors, governmental policies, weather, and other worldwide events, which can influence the markets.

Due to the risks involved in selling options, significant emphasis is placed on risk management techniques to minimize the losses on any particular trade on the portfolio as a whole. Stop-losses orders are used and managed in a proprietary manner to balance the potential loss in any trade versus the opportunity for maximum profit. Stop-loss orders may not necessarily limit losses since they become market orders upon execution; as a result a stop-loss order may not be executed at the stop-loss price. Depending on the model used, risk may be managed through variable position size or risk levels for any market. Additionally, modern portfolio techniques are used to construct the overall portfolio for a given program. These techniques will account for the volatility and correlation for markets as well as behavior during specific market extremes. Portfolio adjustments will be made to account for systematic changes in the relationships across markets. Portfolios are managed to meet risk and volatility tolerances.