Strategies About Market Factor Sustainable Fixed Income Options Personal Index Portfolio Builder Research team Philosophy Our Team Contact Us

QRG Options Strategy

The Quantitative Portfolio: Options Strategy is designed to be an options-based solution for low-basis and/or concentrated stock positions.

QRG’s approach aims to give an investor the tools needed to achieve their desired objective through a quantitative approach to options across three hedging strategies. These strategies can help reduce idiosyncratic risk associated with concentrated stock positions while helping to mitigate the realization of capital gains.

Implementations

Expand All
Covered Call
QRG’s covered call strategy attempts to take advantage of the volatility risk premium to:
  • Maximize profitable call option income
  • Minimize the risk of the stock being called away
The optimization process utilizes the market’s expectation of the return and volatility of the stock to determine the optimal amount of risk for the covered call overlay. This creates a dynamic, diversified income stream that adjusts to market conditions at each rebalance. QRG’s approach to income generation focuses on the net profit of option income versus maximizing current income to enhance the return of the position over time.
Minimum Investment:$250,000
Inception Date:TBD
Protective Put
A protective put strategy involves two positions: long put option and shares of the underlying stock. Wealth protection is the main objective while there is a potential for upside because the stock is retained. QRG’s approach to put protection is based on the client’s desired level of downside protection. The level of protection must be balanced against the cash outlays required to purchase the hedge. Clients are able to customize the strategy based on:
  • Desired downside protection
  • Number of shares to hedge
  • Time horizon of the protection
Minimum Investment:$250,000
Inception Date:TBD
Collar Strategies
A collar strategy involves buying a put and selling a call on the shares of the underlying stock. The purpose of this strategy is to provide downside protection at a lower cost by generating income from call options to finance the purchase of put options. QRG’s collar strategy adheres to the desired level of protection while generating income according to a customizable approach.
Minimum Investment:$250,000
Inception Date:TBD

Disclaimer

By clicking CONTINUE, I attest that I am an investment professional and am authorized to access materials intended for advisor use.
Continue Cancel
Past performance is not indicative of future results.
QRG’s use of call and put options can lead to losses because of adverse movements in the price or value of the underlying stock or index which may be magnified by certain features of the options. These risks are heightened when QRG uses options to enhance a client’s return. When selling a call option, a client will receive a premium; however, this premium may not be enough to offset a loss incurred by the client if the price of the underlying security is above or below, respectively, the strike price by an amount equal to or greater than the premium. The value of an option may be adversely affected if the market for the option becomes less liquid and will be affected by changes in the value or yield of the option’s underlying asset, an increase in interest rates, a change in the actual or perceived volatility of the stock market or the underlying asset and the remaining time to expiration. Additionally, the value of an option does not increase or decrease at the same rate as the underlying securities. Writing a call in a position can lead to an assignment and involuntary transaction (i.e., “called away”), which cannot otherwise be avoided, upon an exercise of a call in the client account. When purchasing a put, a client’s entire initial investment of premium can be lost.

Option trading involves a significant degree of risk, which each prospective investor should seriously consider. The risk of loss in trading options can be substantial and options are not suitable for all investors. Prospective clients should carefully consider whether such trading is suitable for them in light of their financial condition and individual risk tolerances. The high degree of leverage that is often obtainable in options trading can work against investors as well as for them. More information on the risks of buying and selling options contracts can be found on the CBOE’s website at https://www.theocc.com/company-information/documents-and-archives/publications
© 2008 - Envestnet. All rights reserved. Past performance is not indicative of future results.
This website is for investment professionals only. It is not intended for private investors. Private investors who are interested in our investment services should contact a financial professional.