CCM’s Trading Programs

Hedged Equity Program

The Hedged Equity Program (HEP) is designed as a cash efficient means to deliver superior risk adjusted and total returns than the S&P 500. This program takes advantage of opportunities during the two most impactful market cycles associated with US equities, namely prolonged bull markets and severe market declines.

At all times, the program maintains a leveraged long exposure to the S&P index. This leveraged exposure provides the program with the ability to outperform the S&P and other equity benchmarks during market gains.

The program also maintains equal exposure to CCM’s Long Volatility Program (LVP) which gives it the ability to earn large gains during severe market crisis.

The Hedged Equity Program seeks to deliver significantly higher returns than the S&P index, smaller drawdowns, and a vastly superior risk-adjusted return.

Long Volatility Program (LVP)

The Long Volatility Program (LVP) is specifically designed to profit during market crashes offsetting a client’s equity losses. The program is designed to make large gains during crises periods specifically to offset a client’s risk exposure in equity portfolios.

The LVP utilizes proprietary and systematic signal generation to take long positions in VIX futures as volatility increases during severe market declines. Long positions may be represented in the form of outright futures purchases, calendar spreads, or long S&P and long VIX pairs. This program will have periods of dormancy in which no contracts are traded which may extend for weeks or even months at a time – typically when volatility levels are low or declining.

Since inception, the program has shown itself to be an effective and highly efficient method of protecting traditional equity portfolios.

Short Premium Program

The Short Premium Program (SPP) is designed to collect the premium that equity investors pay to reduce their risk by selling both puts and calls on the S&P 500. SPP is like an equity portfolio insurance company. Ultimately, SPP profits from realized volatility being less than implied volatility. CCM controls risk in three ways in the SPP:

The SPP never sells naked options. The risk of each trade is known at entry and the maximum open position loss is 10%. This does NOT mean that the maximum drawdown is 10%. It does mean that if the S&P dropped 25% overnight, SPP would lose 10% or less.
The SPP sells options with less than 14 days to expiration. Since there are over 150 expirations per year, smaller position sizes can result in double-digit annualized profits.
The SPP minimizes the impact of volatility explosions on its short option portfolio.

The Short Premium Program has other attractive characteristics. Margin levels average between 3-8% with a maximum of 10% in this program, annualized profit targets are 10-15%, and monthly annualized volatility since inception has been favorable as compared to similar strategies.

Total Volatility Program

The CCM Total Volatility Program (TVP) is a combination of various equity and volatility strategies.

The program takes paired positions in the S&P 500 futures and VIX futures markets and uses proprietary, systematic and quantitative metrics to identify profitable short-term opportunities. A paired position will be either long or short both the S&P and the VIX. It also trades a systematic and mechanical model that takes calendar spread positions in VIX futures contracts. The program will periodically take long positions in the S&P Index via long E-mini contracts that are protected by trailing stops. All positions have daily or intra-day stop loss provisions and most positions are hedged.

Generally, the program is equally invested between its various strategies which may be alternately long and short either the market or market volatility. The program does not rely on continual bullish or bearish equity markets nor increasing or decreasing volatility. This program should be considered a leveraged and aggressively traded program that targets aggressive returns and accepts larger drawdowns as a definite reality.

Qualified and interested parties should contact us for performance data and disclosure statements.

Disclaimer

This information is neither an offer to sell nor a solicitation of an offer to buy any securities, investment product, or investment advisory services, including interests in any investment fund or account managed by Covenant Capital Management, LLC (the “Manager”). This presentation is subject to a more complete description and does not contain all of the information necessary to make an investment decision, including, but not limited to, the risks, fees, and investment strategies of a managed account with Covenant Capital Management. Prospective clients interested in a managed account with Covenant Capital must first read the disclosure document and sign and date an acknowledgment stating that they received a disclosure document. No offer to purchase interests will be made or accepted prior to receipt by an offeree of these documents and the completion of all appropriate documentation. Investors must be “qualified eligible participants” and may be required to meet other eligibility criteria as defined in the securities laws before they can open a managed account. Neither the manager nor any of their principals, officers, employees, or associated funds or entities hereby make any representation to any person or entity as to the suitability for any purpose of an investment with Covenant Capital Management.