Over the past several years investors saw significantly diversified market conditions. These highly volatile markets may have caused some jubilation when you reviewed your monthly brokerage statements. But many long term investors spent the past 5 years cringing in fear as they opened the envelopes. And many investors now have a drawer full of unopened envelopes - they don't even want to look.

PTI Securities & Futures clearly understands the struggles facing investors today. But there are alternatives to negative returns - and our Protected Index Program® is one of them. We have been utilizing this successful investment strategy for over a decade and our track record reflects that we have beaten the S&P 500 during this time by upwards of 31.95%. We have also beaten the Russell IWM by upwards of 32.71% since its inception as well!

PTI has a strategy to achieve diversification in customer accounts of even modest amounts through the use of exchange traded unit investment trusts. These trusts trade like individual stocks all day, but really are trusts containing the entire basket of stocks making up a particular index. For example, the SPY, or Spiders, is a basket of all the stocks making up the S&P 500. The QQQ is a basket of all the stocks contained in the NASDAQ 100. In one trade we can achieve the diversification that is otherwise very difficult to achieve in individual customer accounts. We look to further the diversification process by using a blend of the S&P 500 and the QQQ. Unlike traditional mutual funds, the exact content of the trust is always known, and there are no hidden tax issues.

How can this protection, or insurance, be achieved? The development many years ago of long-term options on individual stocks and indices, called LEAPS, has provided a cost-effective way for providing continual price insurance for stocks or portfolios. Prior to their development, the insurance costs in terms of dollars per day for using traditional short-term options was too excessive for continual use. The non-linear dollar decay curve of long-term options allows the dollars per day insurance costs to be acceptable for long-term use. PTI firmly believes that the only way for an investor portfolio to be protected is to actually be safeguarded by put insurance. Trusting an advisor or manager to spot the bumps in the road or general overvaluation and act in time was always expecting too much, as recent events have clearly shown.

An additional part of the PTI strategy is the sale of near-term out-of-the-money call options as a way to pay for the cost of the long-term put insurance. The same non-linear way that long-term options decline in value relatively slowly causes near-term options to decay rapidly. In fact, it is often possible and is our goal to pay for the insurance cost long before the insurance expires.

How is this strategy going to work, both short and long-term? On a short-term basis the fund should perform as follows.

Sample Portfolio Unit:

The goal is to diversify the investment through the use of exchange traded unit investment trusts. Currently there is an ever increasing number of these products, but the most liquid are the SPY, containing the stocks of the S&P 500, and the QQQ, containing the stocks of the NASDAQ 100. We are also watching the growth of the CBOE’s new OEF product, containing the stocks of the S&P 100, as it may have advantages for the future.

In addition to the diversification achieved by the unit investment trust itself, we further that by using more than one trust. Along with the purchase of the trust shares, PTI selects through its proprietary timing model the optimum combination of long-term put insurance and shorter-term call sale. This model takes into account various factors, such as implied volatilities, interest rates, recent market moves, etc. In most cases the combination of the put and call will be selected to limit total risk on the initial investment to 10% or under. As the program advances this risk number will decrease as a percentage of the initial investment.

Long Term Objective:

On a long-term basis we believe that this strategy will equal or exceed the long-term return of the market averages, with much less total risk to the portfolio and much less month to month volatility. As such we believe this to be a superior core strategy for a wide range of individual and institutional investors.