At Vintage Capital Advisors we believe in using every possible investment strategy to make our clients money and to hedge their risk. Periodically, and where appropriate, we will use foreign Currency and/or investments Futures contracts, as part of either a trading strategy or as a longer-term holding, to hedge against downturns in the market which may affect other investments in your portfolio.

For example, let’s suppose your investment portfolio tracks to the S&P 500 Index, and the long term outlook of the market is good, and you want to be fully invested, however the near-term prospects or dismal. 

Rather than sell your existing portfolio, which may have long-term imbedded capital gain issues, you could simply take a short-term counter position to your existing portfolio by selling an S&P 500 future.

You will lose money on your portfolio as the market goes down, but you will make money on your short futures contract as the market goes down. This will allow you to offset your losses and stay fully invested until the market recovers and we are ready to move forward.

The same strategy can take place in the currency markets to offset either interest rate changes or portfolio fluctuations as a result of a volatile dollar.

Please visit the National Futures Association website at and the Commodity Futures Trading Commission website at to learn more about currency and futures trading, including the risks associated with these types of investments.

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The Vintage Viewpoint Blog

The strategy of using options to enhance return, manage risk, or work your way into or out of a position has