1. What is an option?
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Plain Language: An option is a contract that lets you buy or sell a stock at a set price before a certain date. You don’t have to use it if you don’t want to.
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Technical Detail: Options are derivative contracts granting the holder the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a predetermined strike price before or at expiration. They are standardized and traded on regulated exchanges.
2. Why use options?
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Plain Language: Options can help protect your investments, make extra income, or let you bet on price moves without buying the stock outright.
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Technical Detail: Options provide leverage, portfolio hedging, and yield enhancement. They allow investors to construct payoff profiles that differ from linear equity exposure, including asymmetric risk/reward structures.
3. What’s the difference between a call and a put?
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Plain Language: A call lets you buy a stock at a set price. A put lets you sell a stock at a set price.
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Technical Detail: A call option confers the right to purchase the underlying asset at the strike price; a put option confers the right to sell. Both can be exercised until expiration depending on contract style (American vs. European).
4. What are the risks?
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Plain Language: You can lose the money you spend on the option. If you sell options, you might face bigger losses if the market moves against you.
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Technical Detail: Option buyers face limited risk equal to the premium paid, while option writers may face theoretically unlimited risk (e.g., uncovered calls). Risks include time decay (theta), volatility shifts (vega), and liquidity constraints.
5. How does time affect options?
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Plain Language: Options lose value as they get closer to their expiration date if the stock doesn’t move your way.
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Technical Detail: Options are subject to theta decay, meaning extrinsic value diminishes as expiration approaches. This effect accelerates in the final weeks of the contract.
6. How does volatility impact options?
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Plain Language: When markets are jumpy, options get more expensive because there’s a bigger chance of big moves.
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Technical Detail: Implied volatility directly affects option premiums via the Black-Scholes model and other pricing frameworks. Higher volatility increases extrinsic value, benefiting option sellers but raising costs for buyers.
7. What strategies are common?
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Plain Language: Investors often use covered calls to earn income, protective puts to guard against losses, or combinations of options to limit risk.
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Technical Detail: Strategies include covered calls (short call against long equity), protective puts (long put against long equity), vertical spreads (long/short options at different strikes), and volatility plays (straddles, strangles).
8. How are options settled?
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Plain Language: Some options end with you buying or selling the stock. Others just pay you the difference in cash.
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Technical Detail: Equity options typically settle physically (100 shares per contract), while index options settle in cash. Settlement style is defined by the exchange and contract specifications.
9. What happens at expiration?
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Plain Language: If your option is “in the money,” you can use it or sell it. If it’s “out of the money,” it just expires worthless.
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Technical Detail: At expiration, in-the-money options may be automatically exercised by clearing firms. Out-of-the-money options expire worthless. Assignment risk applies to option writers.
10. Are options suitable for all investors?
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Plain Language: Not always. Options can be powerful but risky. You should understand how they work before using them.
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Technical Detail: Options are complex derivatives requiring approval levels from brokers. Suitability depends on investor sophistication, risk tolerance, and portfolio objectives. Regulatory frameworks (e.g., SEC, IIROC) govern investor eligibility.
11. What reporting or transparency should I expect in a fund using options?
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Plain Language: You should get regular updates showing how the fund is using options and how it affects your returns.
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Technical Detail: Best practice includes monthly or quarterly reporting with position-level transparency, risk metrics (Greeks, VaR), and independent audits to validate valuations and compliance.
Structured Risk. Defined Outcomes.
Selling Options
Also known as writing options - can be a powerful strategy, especially if you're aiming for consistent income and higher probability trades.
Here's why it makes sense for many traders
Time Decay Works in Your Favor
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Options lose value as they approach expiration due to theta, or time decay.
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As a seller, you profit from this decay. Even if the market doesn’t move much, you can still make money simply because time is ticking.
Higher Probability of Success
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Buyers need the asset to move significantly in their favor to profit.
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Sellers, on the other hand, win if the asset stays within a certain range.
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Statistically, most options expire worthless - meaning sellers often come out ahead.
Premium Income
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You collect a premium upfront when you sell an option.
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This can create a steady stream of income, especially when done systematically.
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Many traders use this to generate passive income or supplement other investments.
Flexibility in Strategy
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You can adjust positions as the market moves - roll them forward, hedge them, or close them early.
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Strategies like covered calls, cash-secured puts, and credit spreads offer ways to manage risk while still collecting premium.
But Know the Risks
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Selling options can expose you to unlimited losses (especially with uncovered calls).
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Risk management is key: use stop-losses, hedge positions, and understand margin requirements.
If you're methodical, disciplined, and understand the mechanics, being an option seller can feel like being the house in a casino - statistically favored, but always needing to manage risk.
Key Characteristics of Strong Stocks
Characteristic
Why it Matters
Large Market Cap
Indicates stability, institutional interest, and resilience during downturns.
Profitability
Companies with consistent earnings are more likely to weather volatility.
High Volume
Ensures liquidity—easy to enter/exit positions without slippage.
Revenue Growth
Signals expanding market share and future earnings potential.
Strong Margins
High gross and operating margins show operational efficiency
Low Debt Levels
Reduces financial risk and increases flexibility during economic shifts
Positive Free Cash Flow
Means the company can reinvest, pay dividends, or buy back shares.
Moat or Competitive Edge
Unique advantage that protects long-term profitability
Strong Management
Proven leadership drives innovation and strategic execution.
Key Characteristics of Strong ETF/Funds
Characteristic
Why it Matters
Consistent Performance
Historical returns aligned with benchmark or better.
Low Expense Ratio
Keeps more returns in your pocket over time.
Tenure
Established program that is proven to work long term
Clear Strategy
Whether it’s growth, value, dividend, or sector-focused - clarity matters.
Transparent Holdings
You know exactly what you’re investing in.
Low Debt Levels
Reduces financial risk and increases flexibility during economic shifts
Positive Free Cash Flow
Means the company can reinvest, pay dividends, or buy back shares.
Moat or Competitive Edge
Unique advantage that protects long-term profitability
Strong Management
Proven leadership drives innovation and strategic execution.
Covered calls
Is an options strategy used to generate income from stocks you already own.
It’s popular among investors who want to earn extra cash while holding onto their shares - especially when they expect the stock to stay relatively flat in the short term.
How It Works
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You own 100 shares of a stock or ETF.
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You sell a call option on those shares, giving someone else the right to buy them from you at a set price (called the strike price) before a certain date.
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In return, you collect a premium - this is your income.
Two Possible Outcomes
1. Stock Stays Below Strike Price
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The option expires worthless.
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You keep your shares and the premium.
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Win-win.
2. Stock rises above the strike price:
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The buyer exercises the option.
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You must sell your shares at the strike price.
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You still keep the premium, but you miss out on any gains above the strike price.
Why Use It?
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Income generation: You earn money from the premium regardless of stock movement.
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Downside buffer: The premium helps offset small declines in the stock.
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Neutral to mildly bullish outlook: Ideal when you think the stock won’t surge dramatically.
Is an options strategy used to generate income from stocks you already own.
It’s popular among investors who want to earn extra cash while holding onto their shares - especially when they expect the stock to stay relatively flat in the short term.
Covered Calls
A cash-secured put
A conservative options strategy used by investors who want to generate income and potentially buy stocks at a discount.
How It Works
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You sell a put option on a stock or ETF you’d be happy to own.
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You set aside enough cash to buy the stock if the option is exercised.
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In return, you receive a premium - that’s your income.
It’s called “cash-secured” because you’re fully prepared to buy the stock if needed. No margin, no leverage - just disciplined investing.
Two Possible Outcomes
What Happens
Scenario
Your Result
Stock stays above strike price
Option expires worthless
You keep the premium and your cash
Stock drops below strike price
You’re assigned the stock
You buy it at the strike price and keep the premium
Why Use It?
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Earn income from premiums while waiting to buy stocks you like
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Buy at a discount if assigned - often below current market price
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Lower risk than naked options or speculative trades
It’s called “cash-secured” because you’re fully prepared to buy the stock if needed. No margin, no leverage - just disciplined investing.
In Redanna Capital’s Strategy
This is one of the fund’s six income pillars. Redanna sells puts on profitable, high-quality companies it’s willing to own.
Every put is backed by cash, ensuring conservative risk management and capital efficiency
Covered calls
is a tactical options strategy used only during extreme market downturns.
It lets you earn elevated premiums while positioning yourself to buy quality assets at deep discounts - using margin efficiently and keeping the flexibility to exit before assignment.
How It Works
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You reserve cash or margin capacity to cover 100 shares at a chosen strike.
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You sell a cash-secured put, collecting a premium upfront.
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Because volatility is high, premiums are richer paying you for stepping in when others won’t.
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If the trade moves against you, you can buy back the option to avoid assignment.
Two Outcomes
1. Stock Stays Below Strike
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Option expires worthless.
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You keep the premium.
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No shares purchased.
2. Stock drops toward or below the strike
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You can buy back the put to remove assignment risk.
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Or accept assignment and buy shares at the strike.
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The premium lowers your effective cost basis.
Why Use It?
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High-volatility income: Downturns boost premiums.
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Disciplined entry: You only buy shares at a price you pre-approve.
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Margin-efficient: Capital is reserved but not fully deployed.
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Risk-controlled: You can unwind the trade before assignment.
It’s a way to get paid for being prepared - deploying discipline when markets are stressed and buying only on your terms.
is a tactical options strategy used only during extreme market downturns.
It lets you earn elevated premiums while positioning yourself to buy quality assets at deep discounts
using margin efficiently and keeping the flexibility to exit before assignment.
Margin-Optimized (Secured-by-Funds) Put
What Is a Dividend?
A dividend is a payment a company makes to shareholders, typically from earnings.
Payments May Be:
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Monthly
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Quarterly (most common)
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Semi-annual or annual
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Occasional special payouts
Dividend-paying companies are usually mature, profitable, and stable - think blue-chip names or dividend-focused ETFs.
How Dividend Income Works
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You own shares of a dividend-paying stock.
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The company declares a dividend
(e.g., $0.50 per share). -
You receive that amount for every share you hold automatically.
Example: 1,000 shares paying $1 annually = $1,000 in income.
Why Investors Use It
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Predictable cash flow for income-focused investors.
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Compounding power when dividends are reinvested.
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Downside cushion during market pullbacks.
Risks to Watch
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Dividends can be cut or suspended.
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Very high yields may signal weak fundamentals
(“value traps”).
Redanna Capital treats dividend income as one of its core pillars - prioritizing quality, sustainability, and strong fundamentals, not yield-chasing.
is the cash flow you earn from owning shares of companies that return a portion of their profits to shareholders.
It’s one of the most stable, passive income sources - especially valuable in volatile or sideways markets.
Dividend Income
Capital Growth
Also called capital appreciation is the increase in the value of an investment over time.
It’s what happens when the price of an asset rises above what you originally paid for it
In Simple Terms:
If you buy a stock for $100 and it later rises to $150, your capital growth is $50.
That gain isn’t realized until you sell the asset, but it reflects the appreciation of your investment.
Common Capital Growth Assets
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Stocks & ETFs: Especially growth-oriented companies with strong fundamentals
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Real Estate: Properties that increase in market value over time
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Mutual Funds: Focused on long-term equity appreciation
Why It Matters:
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It’s a key driver of wealth accumulation
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Often paired with income strategies (like dividends or options) to balance risk and return
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Long-term investors rely on capital growth to outpace inflation and build net worth
In Redanna Capital’s case, capital growth is one of the six income pillars - focused on owning profitable, scalable companies with strong revenue visibility.
It complements the fund’s premium-selling strategies by adding upside potential to the portfolio.
Equity Diversification
Adding Land, Real Estate, Businesses, and Loan Funding to your investment portfolio isn’t just smart - it’s strategic.
These assets offer unique advantages that stocks and bonds alone can’t match.
Let’s break it down:
Why Businesses Make Sense
Owning or investing in a business - whether it's your own or a stake in someone else's - can be a game-changer:
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Control & Scalability: Unlike passive investments, businesses allow you to influence outcomes. You can grow, pivot, or optimize operations.
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Cash Flow: A well-run business generates consistent income, often outperforming traditional investments.
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Tax Benefits: Business owners can deduct expenses, depreciate assets, and structure income in tax-efficient ways.
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Equity Growth: As the business grows, so does its value - offering potential for a lucrative exit or sale.
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Diversification: Businesses operate independently of public markets, adding a layer of protection during downturns.
Companies that pay dividends tend to be mature, profitable, and stable, like blue-chip firms or dividend-focused ETFs.
Why Land and Real Estate Is a Power Move
Land and Real estate is one of the most time-tested wealth builders. Here's why it belongs in your portfolio:
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Passive Income: Rental properties generate steady monthly cash flow.
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Appreciation: Over time, property values tend to rise, building equity.
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Tax Advantages: You can deduct mortgage interest, depreciation, and operating expenses. Plus, tools like the 1031 exchange let you defer capital gains.
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Leverage: You can use borrowed money to control a larger asset - amplifying returns.
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Inflation Hedge: As prices rise, so do rents and property values, protecting your purchasing power.
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Tangible Asset: Unlike stocks, real estate is physical—you can see it, improve it, and use it.
Together, They Create Balance
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Businesses provide agility and upside.
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Real estate offers stability and passive income.
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Combined, they diversify your portfolio across asset classes, income types, and risk profiles.
1. Structure & Roles
The Redanna Team is responsible for designing, executing, and monitoring all options strategies within the agreed investment framework.
The Redanna team has full discretion, subject to the limits outlined in the partnership agreement and risk schedules.
Investors with Redanna generally do not have veto rights. We provide monthly communication on all strategies where investors can ask questions and raise concerns.
Conflicts are disclosed upfront, with policies in place to ensure fair treatment of all parties involved.
Investing with Redanna
2. Risk Management
No debt, position limits, diversification rules, and stop-loss protocols are embedded in the investment framework.
Leverage is utilized only through secured cash (treasure chest) conservatively, with clear caps defined in the risk management schedule.
Yes, high-risk instruments such as Bitcoin, 0DTE, naked calls, and exotic derivatives, along with others may be explicitly banned.
Through stress testing, scenario analysis, and Value-at-Risk (VaR) reporting.
3. Returns & Economics
Profits and losses are distributed pro-rata based on capital contributions, after fees.
A one time up front fee on any investment. Zero fees or commissions for active investments. This allows for investors to retain more wealth.
Realized gains are distributed per schedule; unrealized gains are reported but not distributed.
Returns are benchmarked against the major indices and reported on monthly.
4. Legal & Compliance
Redanna complies with all government, securities, and accounting regulations applicable to derivatives and pooled investment vehicles.
Through monthly reports and quarterly online virtual meetings detailing positions, trades performance, market updates, and risk metrics.
Offering documents outline risks, fees, and strategy mandates.
First through the individuals and if not resolved through arbitration or mediation, as defined in the partnership agreement.
5. Liquidity & Capital Calls
Lock-up periods are 5 years because we are looking for committed and long term investors. Further definition and clarity are in the offering documents.
Redemption terms for funds greater than 25% are subject to a one year notice period.
Redemption terms for funds less than 25% are subject to a 3 month notice period.
Yes, regular and ongoing capital injections will take place, potentially every six months.
All active investors will be given the first right of refusal on all capital injection requirements as the fund grows.
If current investors don't satisfy the capital injection we will look for interested external investors.
With a free cash flow model and growing cash reserve liquidity is always in a strong state to simply exit any obligations we have in the trade market.
6. Transparency & Reporting
Monthly newsletter and quarterly virtual call, with detailed performance, trade updates, positions, market trends, and risk updates.
All investors get the same information to ensure all parties are clear on what is happening and how the fund is progressing.
Valuations are based on market prices and independent administrator verification.
Yes, with a capital company regular and ongoing audits (internal and external) are required, mandatory, and standard practice.
7. Operational Safeguards
Reputable custodians and prime brokers are engaged to safeguard assets.
Robust systems, ongoing improvements, and third-party audits ensure data and transaction security.
Experienced traders are the key-risk.
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Finding a young cohort that can be trained and grown to operate the system
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With a tiered system and pillars a person can be trained from the ground up.
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Structuring a clear and repeatable system that is trainable over time.
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Insurance policies to mitigate key-man risk.
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Yes, all required insurance is in place and outlined in the shareholders agreement.
8. Exit & Continuity
All trade liabilities will be resolved, Assets will be liquidated, Any outstanding costs cleared, and remaining funds will be distributed to investors per the partnership agreement.
Transfers are typically allowed with Redanna's consent.
The partnership agreement outlines procedures for appointing successors.
Long-term strategies include:
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Infinite Income Model
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Succession planning for key man risk
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Diversifying the portfolio from options trading to wealth accumulation and equity.
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Operational structure to continue .
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Unique investor group who can be accessed for support.
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