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Performance Dates … January 1, 1998 through March 31, 2008

Cumulative Net Profit (Per $50k trading Unit) ... $374,785
Excluding interest income, prior to incentive. No compounding or pyramiding of positions or reinvestment of profit, deducting $40.00 per round-turn trade for dealer spreads and order execution slippage.

Combined performance: monthly or current.

Greatest Net Drawdown on a Series of Trades Marked to Market Daily (Per Unit ) … (-$6,135 )
Drawdown calculations based on trading one standardized contract per market, per trade recommendation, from optimal equity peak to lowest low, prior to recovery, including dealer spreads, order execution slippage and unrealized profit or loss. No representation can be made that future drawdowns will be less or equal to historical performance. Drawdowns in this or any program can be larger than those represented by historical performance.

Qualifying risk tolerance $15k per $50k trading unit maximum permissible drawdown prior to program suspension.

For program description click here.

Program Description

FCM Forex Option Program

Determine the trend and strength of the trend using these tables. See the Opinion column for composite indicators.

Price out stratgey using the option prices on this page. See the Options column for option prices.

Example Trade
Writing the 120 put and call , with only 22 days to expiration = + 2,750
Buying the 11850 put and 12150 call - 1,287 net premium colleted = +1,463 to completely hedge the position
Break even window 117 points + or - 12000 strike
Maximum risk on the trade 33 points or $412.50 versus the net premium collected $1,463 or 3.54 to 1
Option quotes click here

The spreading of mispriced options against fair value options relates to the discrepancy in volatility between two options with the same underlying and, for most strategies, the same expiration date. The key to this method is garnering a trading edge in a mispriced option (over-/under-valued), and spreading it against a properly priced option. As time passes, the hope is that the trader will realize a profit as the option’s volatility equalizes. In the real world of options, options with the same expiration date do not always trade with the same volatility.

Based on the current market conditions and the extent of the mispricing (skew), an option trader can spread with a ratio that is neutral in both direction and volatility, or take an opinion in both or either. Volatility spreading is utilized if volatility is severely under-/over-valued to its average over a specific time frame.

Time decay strategies would be considered if the determination is made that underlying market is in a trading range and will remain that way. Most likely, volatility will stay constant or decrease. The crux of these spreads is that options are wasting assets, and it is better to have time work for you than against you.

Directional range spreads utilize option strategies, which also allow time to be on the side of the position. These spreads have limited risk/reward properties. Rather than purchasing currency outright, the options trader can put on a put or call spread and a directional opinion can be taken.

Key steps to consider when putting on volatility-spread positions include:

1. Measure both current implied volatility and the relevant statistical volatilities.
2. Determine the expected ranges for the underlying curency.
3. Compare current implied volatility to past implied volatility levels.
4. Ascertain the volatility trend.
5. Examine the volatility skews of the options series.
6. Based on our evaluation of volatility and market trend decide whether this is an option position that will provide a trading edge over the markets.

By going through these steps, the options trader is prepared to make a trade determination. The trader should review these steps at regular intervals after the trade is initiated. Options are flexible vehicles, and as options traders we should always remain flexible. Use these steps to become a better and more informed Options Volatility Spread trader.

Forex Risk Statement

The risk of loss in trading foreign exchange can be substantial. You should therefore carefully consider whether such trading is suitable in light of your financial condition. You may sustain a total loss of funds and any additional funds that you deposit with your broker to maintain a position in the foreign exchange market. Actual past performance is no guarantee of future results. Simulated performance results also have certain limitations unlike actual performance records, simulated results do not represent composite trading. Also, since trades have not actually been executed for this composite, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity, simulated trading results, in general are also subject to the fact they are designed with the benefit of hindsight. No representation can or is being made that any trading system will, or is likely, to achieve profits or losses similar to those shown in this simulated performance record.

The performance records have been calculated in a manner we believe to be reasonable and is based on the respective leverage factors intended to be used. Prospective investors must recognize that any simulation of a hypothetical record, even when based on actual trading systems, with qualified trade execution, has inherent limitations. We believe that the records as presented should be of interest to investors in determining whether to participate, such rates of return should by no means be taken as an indication of how the system will perform or would have performed, even given the same trades. Any performance record compiled from individual performance records of any trading methodologies has certain hypothetical and artificial characteristics and must be evaluated accordingly.

Options:

Off-exchange transactions

In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm with which you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price, or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.

Variable degree of risk

Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e., put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of options must increase for your position to become profitable, taking into account the premium and all transaction costs.

The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in cash settlement or in the purchase acquiring or delivering the underlying interest. If the option is on a currency, the purchaser will acquire a currency position with associated liabilities for margin If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transactions cost. If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of options becoming profitable ordinarily is remote.

Selling ("writing" or "granting") an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavorably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest. If the option is on a currency, the seller will acquire a position in a currency with associated liabilities for margin If the option is "covered" by the seller holding a corresponding position in the underlying interest or a currency or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.

Certain jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.

Additional risks common to currency options:

Term and conditions of contracts

You should ask the firm with which you deal about the terms and conditions of specific currency or options which you are trading and associated obligations (e.g., the circumstances under which you become obligated to make or delivery of underlying interest of a currency contract and, in respect of option, expiration dates and restrictions on the time for exercise). Under certain circumstances the specifications of outstanding contracts (including the exercise price of an option) may be modified by the exchange or clearing house to reflect changes in the underlying interest.

Suspension or restriction of trading and pricing relationships

Market conditions (e.g., illiquidity) and/or the operation of the rules of certain markets (e.g., the suspension of trading in any contract or contract month because of price limits or "circuit breakers") may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. If you have sold options, this may increase the risk of loss.

Further, normal pricing relationships between the underlying interest and the currency, and the underlying interest and the option may not exist. This can occur when, for example, the currency contract underlying the option is subject to price limits while the option is not. The absence of an underlying reference price may make it difficult to judge "fair" value.

Deposited cash and property

You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property which had been specifically identifiable as your own will be pro-rated in the same manner as cash for the purposes of distribution in the event of shortfall.

Commission and other charges

Before you begin to trade, you should obtain a clear explanation of all commission, fees, and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.

Transactions in other jurisdictions

Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation which may offer different or diminished investor protection. Before you trade you should inquire about any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been affected. You Should ask the form with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

Currency risks

The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

Trading facilities

Most open-outcry and electronic trading facilities are supported by computer-based component systems for the order-routing, execution, matching, registration, or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses may be subject to limits on liability imposed by the system provider, the market, the clearing house and/or member firms. Such limits may vary: you should ask the firm with which you deal for details in this respect.