Investment Planning Knowledge Circle: Options - When to Use, and How to Benefit
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Do you have a concentrated position in need of hedging? Not to worry, you have options!
Over the last decade, equity markets have created wealth for many investors. Though far too often, investors are concentrated in a single stock. If the investor is neither willing nor able to liquidate the position, how do you determine whether the investor could benefit from an options hedging strategy? Are you ready to execute options strategies to offset the concentration risk?
Also being discussed is selling puts in a way that mimics writing insurance for those looking for downside protection, particularly in stocks that they have interest in taking positions at a price lower than the current market price.
- Concentration risk considerations
- A framework for when to hedge
- Options as insurance – the protective put
- Selling options as a way to generate income
- Writing puts when the cost of protection is high
- Using options market as a means to purchase stocks that currently trade above your “fair value”
Director of Research, Left Brain Investment Research
Brian has 15 years’ experience in the investments industry. Before joining Left Brain, he spent nearly a decade managing an independent portfolio of derivatives, focused mainly in the oil/gas and commodities markets, but also in equities and fixed income. Brian earned his B.S. in International Relations, with a concentration in International Economics, from Georgetown University in Washington, DC. He is currently a candidate for the Chartered Financial Analyst (CFA) designation.
Brian is a resident in the City of Chicago, where he lives with his wife, Michelle, and young daughter, Juliette. In his spare time, he enjoys spending time with family, working out, cooking, and traveling.
Ryann Marotta, CFA, CFP
Senior Portfolio Manager
Ryann Marotta, CFA, CFP®, is a senior portfolio manager with 15 years of experience in the financial industry.