T-Portfolio
Vision Advisors offers the Total Portfolio in which it may employ any of the strategies that it uses in managing other portfolios offered such as the Equity, Dividend, Balanced and/or Fixed Income Portfolios. In addition, Vision Advisors may write naked call or put options, enter credit spreads (using either puts or calls), short stocks 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 option trading level five (the highest level) along with margin access.
In this portfolio, the manager will seek to meet long term objectives as designated by the client consistent with the other portfolios available through Vision Advisors. However, Vision Advisors will have discretion to employ alternative strategies or opportunistic trades in order to take advantage of perceived opportunities in the market. Adhering strictly to one of the other portfolio strategies offered by Vision Advisors does not provide 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 an options strategy due to a severe move in an underlying stock or the market in general.
Vision Advisors may use the following strategies but is not limited to these strategies:
Selling a short (i.e., uncovered) call position provides income to the seller, but involves unlimited downside risk potential as the underlying stock price can rise above the option strike price. If the buyer of an in-the-money call option exercises his or her right to purchase the stock, the option seller must buy the stock at the prevailing market price on the open market and then sell it at a loss at the option strike price, or deliver the underlying long position, which the seller may not wish to do.
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 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 profits when the underlying security changes little in price before the expiration of the straddle. Being short a put creates an obligation to purchase the underlying stock at a specified price if the option is exercised against the holder of the short put. A naked put is a short position that is backed up by a margin deposit and the risk is that the potential loss may be greater than the margin deposit.
These strategies may subject the client to margin calls. The profit potential is limited to the premium that is received. On the downside, the break-even point is when the underlying stock price is equal to the put's strike price minus the premium received for selling it. If the stock declines significantly below the strike price by expiration, the client may be assigned stock, obligating the client to purchase shares well above their current price level.
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 force the sale of securities or other assets in a client’s account(s);
- VBS or VFM can sell securities or other assets without 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;
- 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.