Failsafe Capital, LLC

 The Asymmetrical Hedge

Picture two financial instruments which have a very high negative correlation: When "A" goes up "B" goes down and vice versa. Or, in practical terms, when one is making money, the other is losing money. Our objective is to make sure that the profits from one always exceed the losses on the other. By carefully selecting appropriate options and position sizes, we create an extremely high probability that our results will, in fact, accomplish that objective.

The beauty of this strategy is that it makes no difference whether markets are advancing or declining or experiencing extreme volatility. In fact, big swings in the market in either direction actually improve our profit potential.

For the most part, positions are closed within 10 days to one month. However, because we typically employ options on broad-based indexes such as the S&P 500, a significant percentage of our profits get special tax treatment similar to commodity futures, wherein 60% are treated as long term gains and 40% as short term, regardless of how long the positions are held.

Although our own portfolio has consistently realized annualized returns in the significant double digits, regulations require that we emphacize that past performance is no guarantee of future results.