Eickelberg & Assoc., Inc.

Stock Index Option Program

The Stock Index Option Program is an option selling program utilizing S&P 500 options traded at the Chicago Mercantile Exchange. The main emphasis is on selling long dated far out-of-the-money calls and puts. The normal range of account funds committed to margin is 50% to 75%. The Advisor uses both fundamental and technical analysis to forecast the market direction of the underlying index. This means the Advisor does not typically write call and put options simultaneously. Market timing is utilized to optimally write calls or puts based on the Advisors directional outlook. Calls are sold when the market is estimated to be in a topping mode. Margin is held back to allow selling additional calls somewhat after the confirmation of the top. Similarly, puts are sold in anticipation that a market bottom is forming and continue to be sold after the low has been confirmed. Futures contracts on the S&P 500 may be traded as a hedge to existing option positions. Options are also purchased to hedge existing positions. The Advisor’s primary trading philosophy is for profits to be taken when the value of options is reduced as a function of both market direction and time. Positions may be exited prior to expiration to take advantage of short term market swings or good profit opportunities. Trading strategies include making regular adjustments to option positions, including the acceptance of losses to minimize or eliminate risk.