The Hedged ETF Strategy seeks to provide capital appreciation through participation in the broad equity markets while hedging overall market exposure. The program uses an enhanced index strategy which invest primarily in highly-liquid, broad-based Exchange Traded Funds (ETF's) while using options to limit investor risk, as compared to traditional equity-only investing.
The Hedged ETF Strategy can be deployed in three varying levels to match your desired risk vs. reward profile according to your investment objectives and market outlook.
Narrow trading range generates highest income and limits movement of the underlying ETF.
Trading range has moderate income and allows some ETF value appreciation.
Wide trading range produces some income but allows ETF to move more freely.
All three levels set ETF movement limits 2-to-6 months into the future. This short time-frame allows opportunity for dynamic adjustment to best suit future market movements according to each level's objective.
Pacini Hatfield Investments aims to generate monthly income by selling call options based on the ETF's held in the account. Additionally, the holdings may be hedged by purchasing put options that expire 2-to-6 months in the future.
PHI principals and technology systems monitor option pricing as well as the market as a whole.
Trades are made using account cash value. Some cash may be sidelined for contingencies.
Typically the options are held to expiration so the full premium value is realized.
Capital is put to work immediately to sell more spreads for the next cycle.
Learn what options are and how they are used
Learn about the option collar, used in the PHI strategy
Discover a study showing how the use of options decreases portfolio volatility