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PTI Securities & Futures LP
  ............ 800.821.4968
 
   

Investment Professionals - for the Professional Edge

   
 
Welcome to PTI Securities & Futures LP. We cater to investors by offering high-end trading and money management services.
View the history of PTI Securities, management credentials, branch offices, news, and valued service partners.
The Protected Index Program provides portfolio diversification and protection, all within the individual client's customized risk profile.
For self-directed, independent traders who do not require broker assistance.
Place your trades by phone. PTI's expert brokers have over ten years on the trading floor and will answer your call by the third ring.
We offer investment education through seminars, teleconferences, a weekly newsletter, and Tom Haugh's financial blog, DOLLAR$ and SEN$E.
Contact us by phone, fax or e-mail. PTI brokers are available Monday - Friday, 7:30am until 4:30pm Central Time. Toll Free 800.821.4968.
Contact Dan Haugh at 800.821.4968 for a consultation.. .  Track Record  .  PIP FAQs  .  Commissions     Education
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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 the full risk of long only investment strategies and our Protected Index Program® is one of them. We have been utilizing this 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 37.16%. We have also beaten the Russell IWM by upwards of 26.88% since its inception as well!

What is the key to the relative success of the Protected Index Program? We are diversified through the use of broad market Exchange Traded Funds, and we limit the risk of major downside market moves.The diversification comes by the investment in Exchange Traded Funds (ETFs), which are comprised of large baskets of stocks. For example, the Spyder's, or SPY's, is a trust including all the stocks with the proper weightings of the S&P 500. The level of protection comes from always having a long term put, or LEAP, in place limiting the risk of a downside move in the underlying.
Investment Process & Money Management Principals
Thomas P. Haugh
Title: Chief Investment Officer
Years With Firm: Since 1991
Education: BA - Notre Dame University, MBA - University of Chicago
Registration: Series 3, 4, 7, 24, 53, 63 and 65
Daniel J. Haugh
Title: President
Years With Firm: Since 1991
Education: BBA - Notre Dame University, MBA - DePaul University
Registration: Series 3, 4, 7, 24, 27, 63 and 65
Robin Spitalny
TItle: Money Manager / VP New York Office
Years With Firm: Since 1991
Education: BBA - University of Michigan, MBA - Northwestern University
Registration: Series 4, 7, 24, 63 and 65

 

 

 

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 IWM is a basket of all the stocks contained in the Russell 2000. 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 SPY, IWM or other diversified ETFs. With ETFs, the exact components are always known, and there are no hidden tax issues.

The second issue evident by the recent stock market history is the need for some level of protection either from general market declines or random shocks like the events of September 11. It becomes painfully obvious by talking to wide groups of investors that not enough analysis and hedging of market risk was undertaken by the average investor. The question was not asked or answered often enough “How does your portfolio look and how would your life-style change if Cisco was to go back to $15 per share?” Despite repetitions of tired clichés like “I am in for the long haul,” or “I don’t worry about the price, I am a buy and hold guy,” most investors are not happy with portfolio declines of much more than ten percent.
Portfolio Construction

How can we limit the risk of major downside moves? The development of longer-term options, called LEAPS, has reduced the day-to-day cost of protection due to the unique way options decline in value over time. Options do not decay linearly, meaning that in most situations (can be different in periods of extreme market volatility) the further out in time an option expiration date goes the lower its protective cost on a daily basis. 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 achieve a level of protection against extreme downside market moves is through the purchase of put options. The purchase of Exchange traded put options lowers the risk of downside market moves to the amount of the premium paid for the put plus the amount the put is out of the money (if any). 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.

The purchase of the LEAP put, although significantly reducing the risk of the position, does not eliminate the intial total risk of the position. Initially, the risk of the position is the amount paid for the put plus the amount that the put is out of the money. Therefore, an additional part of the PTI strategy is the sale of near-term out-of-the-money covered call options as a way to pay for the cost of the long-term put insurance. Out-of-the-money call options are options written above the current price of the underlying security. For example, if the underlying security was trading $100, a sale of a call above $100, say the $105 calls, would be considered out-of-the-money. 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 long term basis, the total risk of a sample initial position would be as follows:

Purchase of sample ETF cost per share ...........$101.00
Purchase of 2-3 year 100 put on that ETF......... $ 11.00
Sale of a one month 105 call on that ETF...........$ (1.00)
Total cost per share ........................................$111.00

The long term put establishes a minimum value of the position of $100 because of the put which is the right to sell the stock at $100 for the life of the put. Therefore the maximum risk of the position is established to be $11.00 per share. This is $11 of risk for an investment of $111 or 9.9%. This risk will vary by the option prices at the time of investment, but can be established prior to the investment based on the option prices at that time. For each successive month, another call can be sold, but no other put need be purchased for the life of the put so each month additional call sales can lower the total cost and therefore the risk of the position. Future call sales can never be accurately predicted, however we do expect to significantly reduce or hopefully totally offset the cost of the put.

On a short-term basis it should perform as follows:

    • The strategy may under perform the averages (maybe significantly) in any month where prices appreciate more than the percentage out of the money of the calls sold. In fact, the upside is limited to the amount of the premium in the call sold plus the amount the call was out-of-the-money. For example, if the underlying was trading $100 and the $105 call was sold for $2, the maximum upside potential would be the $2 premium plus the $5 amount out-of-the-money ($105-100) for a total of $7.
    • The strategy may significantly out perform the underlying index in rapidly decreasing markets, due to both the put protection purchased and the call premium sold.
    • The strategy may tend to outperform the market in times of small market movements, as the time decay of the short call is generally greater than that of the long put (this relationship can be affected by general market volatility and by prices paid by the particular put purchased or calls sold).

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 IWM, containing the stocks of the Russell 2000. We are also watching the growth of the Select Sector SPDRs to allow us to over and under weight specific market sectors.

In addition to the diversification achieved by the ETF itself, we further that by using more than one ETF. Along with the purchase of the ETF 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. As the program advances this initial 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 competitive core strategy for a wide range of individual and institutional investors.

 
 
SPX
PIP
Cumulative since inception March 1998
+ 16.47% + 53.63%
Year-To-Date
- 7.08% + 1.61% 
1 Month
- 5.39% + 0.04% 
1 Year 
+ 14.50% + 0.80% 
3 Year
- 26.29% + 1.49%
5 Year 
- 2.93% + 17.50%
10 Year 
- 14.57% + 19.83%
PIP Performance indicates gains cumulative since inception of March 1998, YTD, 1-month, 1, 3, 5, and 10-year records ending June 30, 2010, that the PIP produced consistent returns in a hedged portfolio. Supporting documentation for the performance of the PIP program can be obtained from Dan Haugh and can be requested by calling 800.821.4968 or by email at Dan@PTISecurities.com.

Performance History:
From inception of the Program in March 1998 to mid- 2000 the market had a relatively strong advance, topping out in August of 2000 with the S&P up 41% since the March 1998 start. The PIP lagged the market during this period, with a total return of 31% from March 1998 to August 2000. From that August 2000 market top the S&P sold off rather steadily and steeply to a low in July of 2002 of minus 15.8% in the S&P, meaning the S&P gave back the 41% it had been up and was down an additional 15.8%. The PIP Program lost as well, but went from a positive 31% to a positive 9%. From that low point the S&P rallied to a high of positive 58% in October of 2007, while the PIP was up 62% from March 1998 to the same point. Again, as expected, the PIP lagged the S&P at a time of an extended market advance. From that October 2007 high in the S&P, the market had a severe sell-off to the March of 2009 lows of minus 13%, while the PIP gave up only 13% to still be up 49% since March of 1998. Since that low in March 2009 the S&P has staged another dramatic rally to go from down 13% to up 23% from March 1998 to March 2010. In that same period the PIP has actually had a negative return, now up 52% since March 1998. What the graph shows is as predicted, the Program under performs in periods of rapid market advance and over performs in periods of market declines. It also shows that there can be and has been some extenuating market conditions (such as extreme movements in implied volatility) that can influence the predicted performance of the PIP vs. the S&P 500.

This track record is derived from the actual returns of the largest accounts using the S&P 500 (SPY) and reflects the return of over 30% of the assets invested in the Protected Index Program (PIP) using the SPY. Multiple accounts are included in the track record to reflect the fact that any one account may have a slightly different put or call strike (or both) on any given month due to market conditions when the accounts were invested. PIP returns are inclusive of all costs. This return represents the average return achieved by amounts invested in the S&P 500 Protected Index Program over the time frame indicated. The return is based on cash invested and uses no leverage or borrowed funds. For the first several years of the track record, accounts were advised on both a discretionary and a non-discretionary basis. Although PTI was responsible for making investment recommendations to non-discretionary accounts, they were free to accept, reject or modify those recommendations and had ultimate decision-making authority. Such decisions by the client could have impacted the performance. Currently all accounts included in this track record are managed by PTI. Returns in the composite do not include the reinvestment of dividends, interest and cash generated from covered calls writing, and if all accounts did include reinvestments, this would slightly increase the performance. The investment performance of any individual portfolio may have been better or worse over this period than the results shown herein. By presenting the composite performance, no representation is made that any particular portfolio or group of portfolios had precisely this performance. Past performance is no guarantee of future results. PIP returns are inclusive of all costs. PTI does not charge any management fees for PIP accounts, however, all trades made in this program will be charged our broker assisted commission for that trade and all of these commissions have been included in the calculation of the track record. Click for PIP commission rates.
PIP Track Record and Performance Chart (PIP vs. IWM)
 
 
IWM
PIP
Cumulative since inception July 2005
- 4.33%
+ 22.55%
Year-To-Date
- 1.85% - 0.10%
1 Month
- 7.33% - 3.01%
1 Year 
+ 21.53% + 1.67%
3 Year
- 23.65% + 1.96%
PIP Performance indicates gains cumulative since inception of July 2005, YTD, 1-month, 1, and 3-year records ending June 30, 2010, that the PIP produced consistent returns in a hedged portfolio. Supporting documentation for the performance of the PIP program can be obtained from Dan Haugh and can be requested by calling 800.821.4968 or by email at Dan@PTISecurities.com.

Performance History:
From the inception of the Russell Index Program (IWM) in July 2005 to August 2007 the IWM had a steady advance, with the Russell advancing 27% and the IWM PIP advancing 24%. From that date until March 2009 the Russell had a sharp sell-off, taking the IWM from a positive 27% to a negative 39% since July 2005. The IWM PIP also lost ground, but remained positive 10% at it low point in March 2009. Since that date the IWM has rallied back strongly to be only down 1% as of February of 2010, while the IWM PIP has rallied less strongly from the low of March 2009 to be up 22% at the end of February 2010. Again, the program has reformed as predicted, under performing in periods of strong market advances and over performing in periods of market declines.

This track record is derived from the actual returns of the largest accounts using the Russell 2000 (IWM) and reflects the return of over 25% of the assets invested in the Protected Index Program (PIP) using the IWM. Multiple accounts are included in the track record to reflect the fact that any one account may have a slightly different put or call strike (or both) on any given month due to market conditions when the accounts were invested. PIP returns are inclusive of all costs. This return represents the average return achieved by amounts invested in the Russell 2000 Protected Index Program over the time frame indicated. The return is based on cash invested and uses no leverage or borrowed funds. All accounts included in this track record are managed by PTI. Returns in the composite do not include the reinvestment of dividends, interest and cash generated from covered calls writing, and if all accounts did include reinvestments, this would slightly increase the performance. The investment performance of any individual portfolio may have been better or worse over this period than the results shown herein. By presenting the composite performance, no representation is made that any particular portfolio or group of portfolios had precisely this performance. Past performance is no guarantee of future results. PIP returns are inclusive of all costs. PTI does not charge any management fees for PIP accounts, however, all trades made in this program will be charged our broker assisted commission for that trade and all of these commissions have been included in the calculation of the track record. Click for PIP commission rates.

As a PTI Securities & Futures client, yes, the money remains in your account.

After consultation with the client, a mutual decision will be reached to determine which indexes to buy.
After consultation with the client, a decision will be reached to determine the degree of protection desired as well as the appropriate put strike to buy.
There are no management fees or inactivity fees for accounts held at PTI Securities & Futures, just the standard broker-assisted trading commission fees apply. See commission rates below.
Either Tom Haugh or Dan Haugh will be managing your account.
Yes, you will be able to access your account online through PTI's e-View system.
The suggested account minimum is $75,000.
As long as you have an IRA account that allows protected puts and covered calls. IRA accounts at PTI Securities & Futures (utilizing the Delaware Charter Agreement) may elect to utilize this management program.
The amount of initial risk (customized to the needs of the individual client) is typically in the 8-12% range.

Member of SIPC, which protects securities customers of its members up to $500,000 (including $100,000 for claims for cash). Explanatory brochure available upon request at www.sipc.org. Additionally, together with Mesirow Financial Inc., PTI has purchased excess SIPC coverage to insure each account for an additional $29.5 million in securities. Note: SIPC does not cover commodity contract and options on futures. SIPC does not protect against market loss.

Contact Dan Haugh toll free at 800.821.4968 to discuss your risk profile and investment goals, then click

(Broker-Assisted Rates)

No management fees. No inactivity fees.
Stock & Index Options...
$5 Per Contract
$45.00 commission minimum
Stock...
5¢ Per Share
$45.00 commission minimum
Rates Effective 7-19-04
 
...PTI Securities & Futures LP .....411 S. Wells Street, Suite 900, Chicago, IL 60607..... P. 800.821.4968 .....F. 312.663.3058
Options involve risk and are not suitable for all investors. Copyright © 2010 PTI Securities & Futures LP .|. Member SIPC NFA FINRA