Commodity Trading Advisor
A CTA is a manager — often CFTC/NFA registered — that runs client money in futures and options on futures, long and short, across rates, FX, equities, and commodities.
Definition
Legally, a Commodity Trading Advisor advises on or trades commodity interests for others. Economically, the word means a managed-futures book: listed futures (and some OTC FX forwards), two-way, typically systematic. The ‘commodity’ in the name is a 1970s leftover — most AUM is financial futures. Registration is a wrapper; the strategy is the book.
Why it matters
Allocators say CTA when they want crisis convexity and low equity beta. Due diligence starts with style (trend vs multi-strategy), speed, and universe — not the NFA certificate.
Case
A ‘CTA’ that is 90% short-vol options is not a trend diversifier. The registration matched; the payoff did not.
How to read it
Ask: systematic or discretionary, trend weight, lookbacks, market count, and vol target. Then 2008, 2011, 2018, 2020, and 2022 — five different tapes.