T-Portfolio
Vision Advisors offers the Total Portfolio in which it may employ any of the strategies that it uses in managing the other Portfolios offered such as the Equity, Balanced, Stock Put Writing and Stock Put Credit Spread Option Program Portfolios. In addition, Vision Advisors may engage in various option strategies including writing naked call options, enter into credit call spreads, enter into short stocks positions and/or take other actions in a client’s account including the use of margin to leverage the assets in a client’s account. This portfolio entails a high degree of risk and requires Level 5 option trading (the highest level) along with margin access.
In this portfolio, the manager is seeking aggressive market returns. Please note that Vision Advisors will have broad discretion to employ many aggressive market strategies in order to seek profits. We believe that this portfolio has the flexibility to engage in activities that are specifically geared to events (either short-term or long-term) which are taking place in the market. For example, Vision Advisors may wish to employ a “tactical tilt” to exploit a current situation in the market or wish to utilize a complex options strategy due to a severe move in an underlying stock or the market in general.
Vision Advisors may use the following strategies, including but not limited to the following:
Selling a short (i.e., uncovered) call position providing an opportunity for profit, but also involving unlimited downside risk of loss as the underlying stock price can rise substantially above the option strike price.
A short straddle is a non-directional options trading strategy that involves simultaneously selling a put and a call of the same underlying security, strike price and expiration date. The profit is limited to the premiums of the put and call, but it has substantial risk of loss if the underlying security either drops substantially below the strike price of the put, or soars above the strike price of the call. This strategy is called non-directional because the short straddle makes a profit when the underlying security only has small changes in price before the expiration of the straddle.
Clients in the Total Portfolio will also have to be approved for writing uncovered options. Clients will need to be approved for Level 3 Options trading in order to write puts and for Level 4 Options trading to write uncovered puts. Clients who utilize puts on Indexes must be approved for Level 5 Options trading. Those clients who open option accounts will be provided with a copy of the brochure Characteristics and Risks of Standardized Options (and any supplements) prior to being approved to trade options. Clients will also receive margin and uncovered options disclosure forms. These strategies involve the use of leverage and margin.
Clients will be required to open margin accounts with Vision Brokerage Services ("VBS") or Vision Financial Markets ("VFM") which can allow for substantial leverage in their account and will be responsible for maintaining adequate levels of margin in their accounts. If the market moves unfavorably, clients may be required to deposit additional margin upon short notice to maintain their open positions. Also, clients should be aware that they will have limited ability to withdraw amounts deposited as margin while option positions in their accounts remain open. In the future once regulatory approvals are obtained, suitable clients may be able to open Portfolio Margin accounts (rather than traditional Regulation T margin) which provide for greater leverage and thus, greater risk. Vision Advisors will utilize Portfolio Margin only for clients who request it and have been approved by VBS or VFM, as the case may be.
Clients who open margin accounts will be provided with the full margin disclosure documents. Margin clients should be aware of the following:
- They may lose more funds than are deposited in the margin account;
- VBS or VFM can liquidate any short option position or any other security to cover a margin deficiency;
- VBS or VFM can liquidate positions without first contacting the client;
- Clients are not entitled to choose which securities or other assets in their account(s) are liquidated or sold to meet a margin call;
- The loss on a given short spread is limited to the difference between the two strike prices less the net premium received, after execution charges and any other transaction costs;
- VBS or VFM can increase its "house" maintenance margin requirements at any time and is not required to provide advanced written notice to clients; and
- Clients are not entitled to a time extension on a margin call.