Croker-Rhyne Co., Inc.

Some general perspective as to who we are.....

Ed Croker has been trading commodities since 1986. Ed grew up in the feed business and has a degree in Mathematics from Southern Adventist University in Chattanooga. In 1992, he co-founded Croker-Rhyne Company, Inc., as an Introducing Broker with his broker, Bill Rhyne. Ed is 54 years old.

Bill Rhyne has been a broker and trader for 24 years. The first ten were with Merrill Lynch Futures in Atlanta, one was spent in South America, and the remainder here at Croker-Rhyne Company. He has a degree in European History form Washington & Lee University in Lexington, Virginia. Bill has traveled extensively and cumulatively has spent roughly six years living outside the United States. He is 55 years old. Married to a Chilean, he speaks fluent Spanish (as well as several other languages).

Croker-Rhyne Company is a Guaranteed Introducing Broker affiliated with ADM Investor Services, Inc. (ADMIS) in Chicago. All funds deposited to our accounts are held by ADMIS and all broker statements are generated by them as well.

Ed and Bill are also the principals of Croker-Rhyne Capital Management, Inc., a managed money entity which is registered with the National Futures Association as both a Commodity Pool Operator and a Commodity Trading Adviser.

Here is a bit of guide to how we approach the markets....

A Basic Philosophy 
&
The Both Sides Strategy

Our bias as traders is very much (but not exclusively) toward the technical side with our preferred trading vehicle being the purchase of options on futures, with our typical trade having a three to nine month perspective. What follows is a brief description of the Both Sides Strategy we most often employ to take our positions....All references to gains and losses are made with the understanding we are using long options strategies only.

If you trade futures, whoever you are, much of the time you are going to be on the wrong side of the market. Our approach to trading assumes we are going to be wrong, some, if not a lot, of the time.

Futures are inherently volatile. Our perspective is, what we are really trading is volatility. All the markets will have periods of sideways action, but all of the markets are frequently trying to move up, or down. Your objective is to be going with them when they are really going somewhere.

Futures are highly leveraged. Get on the right side of something which is truly moving and high percentage gains can be a function of that leverage. It goes without saying that same leverage can also lead to high percentage losses.

Buying Futures Options allows you to be on both sides of the market at the same time.  Just what it says. You can buy options in both directions and whichever way the market goes (if it does move), one side will generally benefit from it, one side will not. Of course, if it doesn't move, neither side will benefit, and probably lose money.

Select markets which have done nothing for a long time.   If a market has been trading sideways for quite some time, probabilities "should be" (anything is possible in the futures markets) better it is soon going to move somewhere. Long sideways move are often followed by large directional moves.

Or select markets at price levels at which you can make the statement, " It will not stay here, and, in  fact, should move a long way from here, one way or the other".  As an example, you might look at a market making the same high for the fifth or six time in six months and say, "I don't know which way it's going, but it's not going to be right here six months form now". Obviously, it could be, but, again, probabilities "should" favor it moving away from this old high, and this move could be either substantially up, or down. (Substantially is also, obviously, a relative term).

When you find something you like, put your money on it, but buy some options going opposite your opinion. This goes against everything you will feel. You think you are right or you wouldn't be making the trade. Most of the time, our recommendations are in units of two calls to every put for bullish opinions, or two puts to every call for bearish opinions.

There are then three major scenarios....

1. The market does move, only it goes the wrong way.   Your objective is then to sell the options you purchased as "insurance", as well as those representing your opinion, (whatever they are worth), when, and if, you are able to put most, or all, of your investment back in your pocket. Our experience is, when most people (ourselves included) are wrong, they are very wrong. Not only does the market not move in the direction they anticipated, many times it goes exactly opposite their opinion in a big way. We find, if we are wrong, using this strategy, even a moderate move the wrong way may get you most, or all, of your money back.

2. If you are truly right in the market, you will lose the money you spent on insurance, but you will probably not miss it. If you are right, as a function of the leverage you work with, you have an excellent chance to make enough on the trade to see the insurance as only a small relatively small cost of doing smart business.

3. If the market you enter continues to go sideways, you stand a good chance of losing on both sides. If you get in something which is statistically "due" (in your opinion) to go somewhere, and it still doesn't move during the time you are positioned, you might lose all of your money you have in the trade. But the same trade will still be there and the probability (again, in your opinion) of an impending move may have gone higher. You can put the trade back on by buying options with more time until expiration. Futures are inherently volatile. They DO move.

Obviously, there are many, many permutations as to how the markets can move, and, consequently, what the results may be from any specific position.... 

The approach certainly doesn't guarantee profitability, and it certainly doesn't work all of the time, but you CAN be wrong and still get some, if not all, of your money back off the table  (or, it goes without saying, you can lose every dollar you have invested)....And, when  you are right, you will not miss what you have spent on insurance. 

This is a rough outline of a concept developed over a number of years. There are no specifics here as to how we do what we do; how we make our choices, how we diversify, how we determine what options to buy, how much time we give a trade, etc. Suffice it to say, over the years, we have drawn thousands of lines, studied thousands of charts and indicators, and finally reduced our trading process to what we think are some fairly simple rules and approaches. If you are interested in finding out more about what we do, please contact us by phone or e-mail.

Thanks,

Bill Rhyne

800-578-1001
770-425-7241

Croker-Rhyne Co., Inc.
3215 Stoney Acres Dr.
Kennesaw, Ga.30152