by Chase Thomas and Harvey Sax
Markets remain influenced by several competing factors. Recent economic and employment data have remained positive, while rising oil prices, higher interest rates, and increased volatility have introduced additional uncertainty. The S&P 500 continues to provide broader market context, with reported forward earnings remaining at elevated levels.
Oil markets have also remained highly responsive to geopolitical developments, with headlines producing significant moves in both directions over recent sessions. Interest-rate expectations remain a key focus ahead of Wednesday's Federal Reserve decision, while the 10-year Treasury yield and index-level volatility are also being closely monitored.
The fund is currently down approximately 2% to 3%.
Recent performance has been influenced by movements in the fund's oil positions and the broader market environment. USO reached new highs last week before declining Friday, opening higher today, and then moving lower following headlines concerning potential diplomatic developments. Separately, reports indicate that a Saudi pipeline carrying approximately 4 million barrels per day was damaged and may remain out of service for several weeks.
Current oil positions are being progressively repositioned to reduce directional exposure. Calls and puts expiring this Friday are being rolled forward, with the put positions being roll-split. The current process involves shifting exposure from calls toward puts in increments of approximately 10% every two to three days.
Implied volatility declined today, reducing the time value of the option positions. Although USO finished the day higher, positions on both sides of the book benefited from the decline in implied volatility. The Alpha Low Volatility Fund was up more than 1% on the day on that basis.
The fund is currently down approximately 2% to 3%.
The recent decline reflects the broader market environment and movement in oil. Current positioning continues to focus on reducing directional risk while existing oil positions are progressively repositioned.
Calls and puts expiring this Friday are being rolled forward, with the put positions being roll-split. The process remains focused on reducing exposure rather than adding new directional risk.
The fund is currently down approximately 2% to 3%.
Recent market movement and oil volatility have contributed to the current decline. The ongoing repositioning of oil positions is designed to reduce directional exposure on both sides of the book.
Current conditions continue to be monitored closely, particularly oil headlines, interest-rate expectations, and changes in index-level volatility.
The fund is currently down approximately 2% to 3% and has been the most affected of the group.
The primary driver has been exposure to QQQ and NVDA. NVDA declined approximately 15% over the past three sessions following its earnings report. Covered call positions in the fund contributed positively over the same period, partially offsetting the effect of the decline in the underlying equity exposure.
This interaction between equity exposure and covered calls represents the normal push-and-pull of the strategy's structure, with gains and losses from different components affecting the overall result in opposite directions.
The portfolio recorded a positive return today, its first positive day in approximately a week. Over the preceding period, declines were incremental rather than concentrated in a single large move, with no significant individual-day drawdown.
MTD: Approximately -1% to -1.5%
YTD: Approximately +1.5%
Performance figures are preliminary and unaudited. Official statements follow and govern.
The portfolio currently carries meaningful exposure to long crude and Brent. Harvey views this as an area where the portfolio currently sees an opportunity, while noting that similar positioning is widely held across the market.
Insider buying continues to be observed, although activity is currently lighter due to the blackout period.
Current conditions include rising interest rates, rising oil prices, increased volatility, and uncertainty ahead of the midterm elections. Seasonal characteristics are also currently unfavorable. The portfolio's current emphasis is on maintaining liquidity rather than adding exposure under these conditions.
Current positioning across the strategies is focused on reducing directional risk on both sides of the oil positions rather than adding exposure.
Oil headlines remain a significant consideration because the market can reverse quickly and move the positions sharply within a single session. The current repositioning process involves shifting exposure from calls toward puts in increments of approximately 10% every two to three days. Existing positions expiring this Friday are being rolled forward, with the put positions being roll-split.
The Federal Reserve's Wednesday decision is another key focus, with current market pricing pointing toward a quarter-point increase. The 10-year Treasury yield and index-level volatility are also being monitored.
The current environment contains factors pulling in opposite directions. Reported forward earnings across the S&P 500 remain at high levels, and recent employment and economic data have been positive. At the same time, rising oil prices and interest rates represent countervailing factors. Current positioning reflects these competing conditions rather than treating either direction as settled.
If conditions reverse quickly, the current process calls for reducing exposure rather than defending positions.
Performance and Reporting Note: Fund performance figures are preliminary, unaudited, and reported before applicable fees and do not include incentive fees unless otherwise noted. Official NAV Fund Services statements govern final fund performance reporting. Account-level figures for separately managed accounts, when included, are reported from Interactive Brokers; fee treatment should be verified against the applicable account statements before publication.
The views expressed herein reflect current market commentary and portfolio observations as of the date published and are subject to change without notice. Statements made by portfolio managers represent current opinions based on prevailing market conditions and should not be interpreted as guarantees, forecasts, or assurances of future performance or market direction.
Any performance information shown is preliminary, unaudited, and may reflect results before applicable fees, expenses, or final administrator reporting where noted. Actual investor results may differ based on fee structure, timing of contributions or withdrawals, and other account-specific factors.
This material is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security, fund, or investment strategy. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal.
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