The Option Overlay Strategy seeks to provide income generation and capital protection on client's existing holdings. The program uses exchange traded options to generate monthly income that can also provide a true hedge on the holdings as desired. PHI works with clients and advisors to determine risk level, income and capital needs. The program is a potential way to generate income, provide protections all while allowing investors to keep their holdings. This program is 100% customized for each client.
The Option Overlay Strategy can be deployed in 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 can limit movement of the underlying holdings. This program level works well when the clients are willing to forgo some upside potential to eliminate large moves to the downside.
A little wider trading range will experience less income than Conservative. This program level works well when clients are slightly bullish on positions and are willing to forgo some income to allow for greater capital appreciation.
Wide trading range produces small levels of income but allows much greater capital appreciation. This program level works well when clients are bullish and want to protect the positions from catastrophic moves in the market.
All investment programs aim to trade options with expirations no more than 6 months into the future, though typically focuses on 2-to-4 month durations. This short time-frame allows opportunity for dynamic adjustment to best suit future market movements according to each level's objective.
Pacini Hatfield Investments seeks to generate monthly income by selling options using the underlying holdings in the client's account as collateral. Additionally, these options are typically hedged by purchasing options that expire 2-to-4 months in the future used to minimize risk of market downturns.
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