DEFINE YOUR RISK WHEN THE TRADE IS PLACED.

My primary focus is to manage a portfolio of 30-year treasury bonds and trading hogs is an appendage of my T-Bond Portfolio Management Program which is based on the premise that the only thing I know for sure about the markets is that today will end, TIME WILL PASS. Using this constant as my foundation, the following is my two-part T-Bond Portfolio Management Program:

Part 1. 30-year US Treasury Bonds are bought because of their safety and their interest rate is generally higher than other government debt instruments. There is risk that the asset value of the T-Bonds will erode away when interest rates go up. This risk of asset erosion is hedged with futures and options on futures.

Part 2. The yield on the T-Bond portfolio can be enhanced by using sophisticated option strategies to harvest option premium on T-Bond options based on the only constant in the market place of “Time Will Pass”. Additionally, lean hog futures contracts are traded using the abundance of fundamental data that is available from the USDA. This data is superior to that available in any other market.

When selling a T-Bond option, I define my risk by buying an option with a higher or lower strike that will define my RISK.

This program is enabling me to significantly enhance the yield on a T-Bond portfolio that is defended against asset erosion WHEN (not if) interest rates rise.

Best wishes,

dhm