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MONEY
MANAGEMENT
by
Lawrence G. McMillan
Questions
& Answers
1.
Isn't option trading risky?
2. Who actually holds my money?
3. How is McMillan Analysis Corp. compensated?
4. Are fees paid directly from the account?
5. Is my money liquid?
6. How do I get started?
Q:
Isn't option trading risky?
A: Actually, derivatives are very versatile, so that positions can
be constructed that range from very conservative - compared, say, to
common stock ownership - to those that are quite risky. Our
philosophy of a hedged, market neutral approach is designed to
produce a diversified portfolio of options that has a fairly low
level of statistical risk.
Q:
Who actually holds my money?
A: Customer funds are held at the brokerage firm. McMillan Analysis
Corp. uses both stock and futures brokers who are familiar with the
strategies employed in the managed accounts. However, should the
customer strongly prefer to use another broker, that request can be
accommodated. McMillan Analysis Corp. itself does not have custody
of any of the customer's assets.
Q:
How is McMillan Analysis Corp. compensated?
A: Our clients pay a quarterly incentive fee based on profits
generated. If there are no profits for the quarter, then any losses
must be recouped before compensation is due. There is no fee based
on the amount of assets under management.
Q:
Are fees paid directly from the account?
A: Most clients prefer to have the incentive fees paid directly from
their accounts. However, if the client wishes to pay the fees with a
check from a separate account, that is certainly allowable.
Q:
Is my money liquid?
A: Definitely. While any strategy we employ is normally in place for
several weeks or even months, there is a liquid secondary market for
anything we trade. Therefore, it is a reasonably simple matter to
liquidate positions in order to turn them into cash in the account.
You can withdraw any or all of your money at any time, with no
surrender charges or other transaction costs.
Q:
How do I get started?
A: First, if you have not already done so, request and read our
Disclosure Document. If, after reading that, you are interested in
an account, contact us so that we can guide you through the
paperwork required to open the account. We prefer cash, rather than
assets, as the initial funding of the account.
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