Our Process

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We think of your account as a business funded by your irreplaceable savings.  The first priority of a business is survival, so our ultimate concern is the preservation of your capital.  To us, endurance and durability are more important than growth.  The second priority of a business is to generate consistent free cash flow, and to do that we primarily write equity options. We only write options on companies we want to own, a process that starts with the fundamentals.  Our analysis focuses on the financial condition of a company (e.g. the company’s liquidity, leverage, free cash flow, direction of operating income, future earnings potential, growth and sustainability of dividends, etc.) and economic factors (e.g. the health of the overall economy, industry performance, etc.) to determine if this is a company we want to own and, if so, whether the stock is undervalued or overvalued.  While a healthy balance sheet and strong earnings are important, we also look for management teams that exude trust, competence, and integrity.  If we owned 100% of the company and would not keep the current management team, we will not invest in the company.  Once we are comfortable with a company on a fundamental and qualitative basis, we use technical analysis to determine our ideal entry point and time horizon for a trade.  We feed all this information into our proprietary Options Screener, which monitors in real time the option prices of our target strikes and expirations for all qualifying companies.

 

Our portfolios are concentrated, with 10-15 holdings on average, and we do not attempt to outperform or track an index with our holdings or sector weightings.  We utilize separately managed accounts to manage your portfolio, as you should always be able to log in and see exactly what your balance is and withdraw cash as necessary.  

 

Our Story

 

After graduating from Virginia Tech, Denise worked as a credit analyst/private banking AVP with NCNB National Bank for over 4 years before leaving to work for the Beck Family Office in 1987.  The crash of 1987 was an important learning experience regarding the fear and uncertainty that overwhelms people when their life savings or financial flexibility is at risk. In 1992, Denise purchased Electrical Motor Servies, a 30-person service business that rebuilt and sold new electrical motors. The lessons of operating a small business such as 30 people and their families counting on her for their livelihood, the resilience required to generate growing margins, and constantly creating value shaped everything she now thinks about as an investor and advisor.  Denise returned to the Beck Family Office in 2009 to help preserve and manage the family assets, balancing the need to provide for current and future generations.  Accordingly, chasing yield with above average risk was not acceptable.  

 

Denise’s friend and mentor Ron Brandes, through whom she met Ethan, introduced her to the strategy of using equity options to generate consistent, above average cash flow.  Slowly, the strategy began to take shape for the Beck Family Office, starting with just a few option contracts in 2015 and growing to 5% of total assets in 2020.  Yields were consistently well above fixed income returns, allowing the BFO to make required distributions (that were previously generated from a much larger fixed income asset base) with less capital exposed.

 

In high school, Ethan began learning technical analysis from Ron Brandes, a mentor who introduced Ethan to the work of people like Welles Wilder, Steve Nison, John Bollinger, Martin Pring, and Tom Dorsey. After graduating from Virginia Tech in 2012, Ethan worked in the Valuation and Forensics department at Keiter CPA in Richmond, Virginia.  Ethan learned firsthand that sustainable net cash flow and strong management are of paramount importance when valuing privately held businesses in a wide variety of industries.  Further, his experience testifying as an expert witness in forensic accounting matters drove home the importance of attention to detail and defending opinions.  While at Keiter, Ethan co-founded an RIA, and Denise was one of the clients.  

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In late 2021, Ethan and Denise started exploring the possibility of combining our experience to improve the returns of her options strategy.  Grammatical Capital is the result.