Dr. Haddad, MD., MBA graduated from San Jose State University in 1991 with a double major in Nutritional Science and Psychology. Thereafter, Dr. Haddad attended UCSF Medical School from 1992 to 1996. From 1999 through 2004, Dr. Haddad completed a residency program in orthopedic surgery at San Francisco General Hospital, an affiliate of UCSF. Also, at San Francisco General Hospital, Dr. Haddad completed a fellowship program on Adult Reconstructive Joint Surgery from 2004 to 2005.
Currently Dr. Haddad is in private practice at San Jose Orthopedic Medical Group, and is also on affiliated with the following hospitals: San Francisco General Hospital, Highland Hospital, Palo Alto Medical Foundation, and Roseville Sutter Hospital.
In addition to his medical practice, Dr. Haddad is active in research clinical trials; he has published numerous papers on the phenomena of pulsed electromagnetic field stimulation. Currently, he is conducting prospective trials on a large population study involving the safety and efficacy of electromagnetics on patients inflicted with osteoarthritis of the hip.
Aside from Medicine, Dr. Haddad has also been involved in the financial markets as a hedge fund manager for the past 11 years. He has Series 7, 6, 63, and 64. Dr. Haddad also has the CMT designation. He has managed portfolio funds for several US brokerage firms and universtity endowments.
Dr. Haddad is in the process of launching an independent hedge fund that will incorporate a quantitative trading approach of equities coupled with a complex option strategy as a form of hedge.
Dear perspective investor:
In the next several paragraphs, I will hereby attempt to summarize the quantitative model of trading methods and strategic decisions that I employ to generate competitive returns. However, please be advised that such a complex topic is beyond the scope of this email.
In sum, my style and method-of-choice of equity and stock option selection criteria is based solely on technical and fundamental analysis.
To aid in the comprehension of how technical analysis works, one needs to know that a finite number of traders participate in the markets on any given day. These individuals interact with each other on the trading floor and form collective behavior patterns. These patterns are not only observable and quantifiable, but also repeat themselves with statistical reliability; that said, technical analysis is a method that organizes these collective behavior patterns that give clear indications of when there is a greater probability of one thing occurring over another.
Fundamental analysis attempts to take into consideration mathematical models that weigh the significance of a variety of variables (corporate earnings and revenues, price-to earnings ratio, gross margins, valuations, etc..) that could effect the relative balance or imbalance between the supply and demand of a particular stock, commodity, or financial instrument. The trouble is that this economic equation that defines the laws of supply and demand does not have an exponential variable to quantify fear or greed.
Fear or greed is an element of human nature which is called market sentiment or behavioral analysis, and fundamental analysis gives it no consideration. It's people who express their beliefs and expectations about the future that make prices move and not fundamental models. The fact that a fundamental model makes a logical and reasonable projection is not much value if traders who are responsible for most of the trading volume are not aware of the model or simply don't believe in it.
In the past 8 years, I have conducted benchmark trials to test the efficacy of a unique investment methodology which incorporates the purchase of the "underlying" shares of a particular company while simultaneously writing the shares' "deep-in-the-money" covered call option. The goal of this method is to simply forfeit the underlying shares by option expiration (third Friday of every month), while pocketing the intrinsic time value of the calls' premium. In order for this method to consistently succeed, the following cardinal principles must be implemented:
1. The selection of the company's underlying shares must trade at multiples much lower than its peers in the sector or relative to the major benchmark indexes (Dow Jones, Nasdaq, S&P 500). Companies whose shares have fallen out favor by Wall Street analysts are best suited for this strategy, because more often than not, the shares stagnate and allow the time value on the written calls to depreciate, thus adding dollar value to your portfolio. Moreover, share stagnation is highly favorable amongst professional call writers because it allows them to capture next month's calls and capture an increased premium value without worrying about share appreciation.
2. Avoid selection of companies whose shares point to a downward trend, a breach of technical analysis. Should this occur, the writer of a call is then obligated to roll lower strike options to safeguard the shares from further decline. Nevertheless, in such a situation, one could dollar cost average the underlying shares, provided that the company's fundamentals are intact.
Let's place the above strategy into a perspective example.
Suppose you purchased 1000 shares of Intel (INTC) at 22.50/share and wrote 10 calls (contracts) for the month of September, strike 22 at .90/contract. Each contract represents 100 shares. This translates into an intrinsic time value of .40/contract times 1000 shares in one month. You'd take the premium of the call at .90 cents and add it to the strike of the call at 22. This would give you a total of 22.90/share. Then, you'd subtract 22.90 from the price of the shares originally purchased (22.50)... This would yield .40/contract times 1000 shares. In sum, if INTC is above 22.00 by the third week of September, you'd have netted 400 dollars on a 22,500 investment in one month. If INTC finishes below 22. 00/share, then you get to keep both the shares and the entire .90 cents/contract.
In the event the shares are kept as of option expiration, I would roll the September call options into the October, generating more premium, until my shares further.
I abide by a principle which goes against many seasoned professionals-- I never set stop-loss limits on either the underlying shares or the calls. I have enjoyed tremendous success by simply allowing my strategies to pan out. Never ever get involved with any underlying equity shares that you're not willing to hold!
All the best,
Jack Haddad, MD, MBA
Orthopedic Surgery
San Francisco General Hospital, San Francisco, CA
San Jose Orthopedic Medical Group, San Jose, CA
Highland Hospital, Oakland, CA
Director of Research and Education
Central Coast Nutrition, Santa Cruz, CA
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