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Nov 21, 2008 2:41 pm

This topic tends to pop up everywhere… Wanted to start a discussion on wether options would work as well in a bull market(assuming we ever have one again) and they do in a declining market or market that jumps everywhere.

Nov 21, 2008 6:43 pm

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Options are how I differentiate myself from other advisors.  I show prospects and clients how I am able to use volatility to offset some of the downside of equities.  I show that that in this market I am acting rather than just “buying and holding” until we “get though it”.


Just this morning the covered call options strategy paid off big for me.  I just got the commitment from a $500k non-producing client to increase the portfolio to $1.5MM fully annuitized.


For now, covered calls are the only option strategy that I am implementing for clients.  It’s more conservative than just owning a stock outright.  Yes, you can give up some upside but to me it is more important to offset the downside and to generate income.  Eventually I think that I will start doing collars.  I just wish there was a way that I could run an options strategy in bulk across a number of accounts.  ML has PIA which allows me to trade all of the underlying equities across multiple accounts but it does not allow me to do options in the same manner.



Nov 21, 2008 7:57 pm

I agree options are a good way to differentiate yourself, because  a lot of advisors don’t do them at (can’t,won’t or not allowed to).

Dec 9, 2008 1:34 am

Its called options based portfolio insurance and should involve writting calls to offset the premiums on the puts. You are basically looking for a no-cost or low-cost premium situation, tho the price of sp5 puts has gone through the roof becasue of volatiolity. I’d suggest showing your real sophisticated clients the potential in writting an out of the money put on the VIX.