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Bayou City Capital, LP
Bayou City Capital, L.P. is a limited partnership based in Houston, Texas, that trades in S&P 500 Index futures and futures options.
The Fund was started in 2000 to explore an option-selling strategy utilized with natural gas storage facilities. Founded with friends and family assets, the strategy was originally tested over various asset classes, including natural gas, crude oil, and equity markets. In 2004, the Fund began to trade solely in the S&P 500 futures market, and the S&P 500 Option Overwriting Strategy was formed.
The Strategy operates on two premises. First, the overall directional trend of the United States equity market drifts positive over the long-term. Second, options on the S&P 500 are overvalued over time as the future volatility the options' prices imply is an overestimate, on average, of the market volatility that actually occurs. Essentially, Bayou City Capital sells options on S&P 500 futures at the Chicago Mercantile Exchange in a fashion that yields positive exposure to the market's appreciation and the passage of time.
The Fund focuses on options that expire in the short-term, within 90 days or less. The Strategy is designed to outperform the S&P 500 over time; after an 11 year track record, the Fund has generated a 21% annualized return. Investments for limited partnership interests in the Fund are available to Accredited Investors, and the Fund offers monthly liquidity, advantageous tax treatment for gains on futures, and a competitive fee structure. Please visit www.bayoucitycapital.com for more details.