Mike S. Newton, CIM FCSIUS Equity High Volatility Put Write Fund ETFHVPWCOMMENTOct 28, 2014
This takes advantage of high volatility where premiums expand on option writing. Can certainly do very well in providing a high level of income, but he thinks there is a certain amount of time decay that happens over time. So you have to be very careful.
High volatility put writes 15 to 20% out of the money. 9% yield yearly. It reduces volatility and so is in his sleep and night portfolio. It underperforms in an up market. He is down to a 2% from 5% position as markets have recovered. It is not a growth thing. It is a yield thing.
This takes advantage of high volatility where premiums expand on option writing. Can certainly do very well in providing a high level of income, but he thinks there is a certain amount of time decay that happens over time. So you have to be very careful.