Strategies

The Dorian Fund’s method of analysis is to first develop a global macroeconomic view of developed and emerging markets. Then once a whole economy view is established a proprietary trading system is used to determine what global markets and/or companies to invest in that best reflect that economic viewpoint. This method of analysis is broadly considered to be a global top-down macroeconomic approach. All investment strategies are executed using a philosophy centered on generating income off every trade / investment. No trade / investment is ever made that doesn’t have the potential to generate real tangible monthly income. The firm chiefly utilizes options on stock indices, bonds, commodities, and futures to execute the Fund’s objectives while minimising risk by hedging at an instrument and/or portfolio level.

The firm’s trading strategy is to only execute what it considers to be monthly income producing trades and investments. The strategy primarily consist of four types of trades that the firm has named Vertical Credit Spread, Naked-Call, Naked Put, and Futures Long/Short. Each type of trade has been defined below.

Vertical Credit Spread: The vertical-credit-spread trade is a strategy that consists of selling a call or put option and simultaneously buying a call or put option. The trade is a net credit because the option that is sold is greater than the option bought. This trade is executed to generate monthly income from the premium received from the credit spread.

Naked-Call: The naked-call strategy consists of selling call options without owning the underlying instrument or a higher call to form a credit spread. This trade is like the covered-call option without the underlying shares to cover the selling of the options; hence, the name naked-call. This trade is executed to generate monthly and sometimes weekly income from premium received when the option is sold short.

Naked-Put: The naked-put strategy consist of selling put options without owning the underlying instrument or a lower put to form a credit spread. This trade is executed to generate monthly and sometimes weekly income from the premium received when the option is sold short. This trade can also be used to purchase shares in a company that meets the company’s long term strategy.

Futures Long/Short: The futures long/short trade consist of buying one or more future contracts and selling one or more future contracts simultaneously to create an offsetting spread. The long/short future position can consist of the same underlying future contract or separate underlying future contracts. For example, one S&P 500 contract can be bought and two Nasdaq contracts can be sold or one “active” S&P 500 contract can be bought and one “non-active” S&P 500 contract can be sold. This type of trade is executed to try to use time duration to gain short-term profits by using offsetting future contracts.