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Alternative Market Briefing

Unique options strategy gains institutional traction

Tuesday, March 01, 2016

Bailey McCann, Opalesque New York:

A unique options strategy at one hedge fund is gaining institutional traction at a time when the public markets are difficult for investors. Third Friday Total Return Fund General Partner Michael Lewitt recently sat down with Opalesque TV to explain the strategy, and how it creates a unique and liquid opportunity for investors.

Third Friday Total Return engages in an options based market neutral strategy that sells at the money straddles of the S&P500 on the third Friday of every month. Lewitt hedges those straddles by buying out of the money puts on both sides in order to preserve capital in the event of a major market movement.

"A lot of funds say they are market neutral, but they're really not. Our strategy doesn't change if the market is up or if it's down," Lewitt told Opalesque TV.

The fund was started in 2007 and has subsequently posted a net annualized return of +7.86 percent since inception. In 2015, The Third Friday Total Return Fund earned a net return of +8.26 percent versus -0.85 percent for the HFRI Fund Weighted Composite Hedge Fund Index and +1.38 percent total return for the S&P 500. The fund had only two negative months while the S&P 500 was negative in 6 of the 12 months of the year.

So far in 2016's choppy market environment, the fund has performed positively, ending January up +0.23 percent.

Lewitt joined the firm as GP in 2012, after previously running institutional portfolios at......................

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