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Gould's main Equity + Options strategies involve overlaying an options writing program on either a diversified group of individual stocks selected by Gould, or on a diversified market index. By writing options, Gould seeks to reduce total portfolio risk, while generating additional current income for investors. Options strategies can also be custom designed to address unique client circumstances, such as a large undiversified position in a single security. Gould’s Equity + Options strategies are:
- Core Equity Plus – This strategy begins by constructing a diversified equity portfolio based on the Long-Term Capital Appreciation strategy. A disciplined and consistent options writing program is then overlaid on the portfolio, which generates additional income and seeks to reduce total portfolio risk. The underlying equity portfolio still seeks to achieve long-term capital appreciation, making it appropriate for investors with medium to long-term time horizons. Gould recommends this strategy for investors who desire additional current income and are willing to forego some upside potential in order to reduce the downside risk of their portfolio.
- Equity Index Plus – In contrast to Core Equity Plus, where we write options on an equity portfolio of individual securities, the Equity Index Plus strategy simulates the effect of writing options against the entire highly diversified S&P 500 index. This strategy is the most disciplined and liquid approach for writing equity options and provides high levels of equity diversification with relatively low transaction costs. This strategy also offers the opportunity for greater tax efficiency due to the potentially favorable tax treatment of index options. In comparison with Core Equity Plus, this strategy may appeal to investors who place relatively more importance on current income and risk reduction, and less emphasis on market upside participation.
- Custom Equity Options - Depending on the unique needs and objectives of the client, Gould can construct custom Equity + Options portfolios. These portfolios are often used to manage situations where clients have large undiversified positions in a single security or unique risk parameters that are best managed with options. For additional information on Gould’s custom equity option strategies please contact one of our investment professionals.
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