Global Markets
Tradable Products
Strategy\n
\n To implement an index buy-write\n strategy: (1) buy a portfolio of stocks or an index ETF, and (2) \u201cwrite\u201d (or sell) covered calls on a\n related index option.\n \n \n \n\n ![\"P&L](\"/res/_img/general/US-Indices-PL-BuyWrite.png\")
\n
Comments\n
\n In a comparison of out-of-the-money (OTM) buywrites vs. at-the-money (ATM) buywrites with the same\n expirations, OTM buywrites often have more potential upside in bull markets, but collect less premium than\n ATM buywrites, which may have less severe losses in bear market years. Depending on different investment\n objectives, investors may choose to write calls on all or part of the portfolio, at a constant or dynamic\n strike, and/or at a dynamic roll schedule. Graphs can vary depending on the strategy used (e.g., an ATM or\n OTM buywrite strategy).\n "; CTX['putwrite'] = "
Cash-Secured PutWrite Strategy\n\n \n \n Goals\n
\n Goals of cash-secured index putwrite strategies may include: (1) improve income from\n a cash or cash equivalent holding, and (2) receive upfront premium income in\n exchange for potential drawdown.\n \n \n\n
\n Strategy\n
\n To implement an index cash-secured putwrite strategy: (1) sell index put options,\n and (2) hold cash or cash equivalents (e.g., Treasury bills) to fully collateralize\n the short options position, in an amount equal to the maximum possible loss of the\n short put position.\n \n \n \n\n ![\"P&L](\"/res/_img/general/US-Indices-PL-CashSecuredPutWrite.png\")
\n
Comments\n
\n The strategy (1) is often used to boost income from a holding of Treasury bills, (2) usually\n has a lower risk than a related stock index, (3) tends to outperform a related stock index\n when the stock markets are in range-bound or bearish regimes, (e.g., in 2008 and 2022), and\n underperform in bull market regimes (from 2012 to 2014, and in 2019).\n \n";
CTX['webinarBaseUrl'] = '/us/index_income';
Income Generation
Strategy Indices
Cboe Global Indices strategy indices are used by investors to explore
various strategies - like income generation.
Performance Tracking
Indices designed for income generation track the hypothetical performance
of selling options compared to traditional investments.
Strategy Benefits
BuyWrite strategies and PutWrite strategies often have experienced less
volatility, lower Betas, and less severe drawdowns than related stock indices.
Monthly Premium Income
The chart below shows the gross amount of yield as a percentage of the underlying values
held for the BXR, BXM and BXY Indices.
The BXR Index had the highest yield because the Russell 2000 Index was more volatile than the
S&P 500 Index, and the BXR and BXM indices that wrote at-the-money index options generated
more gross premium than the BXY Index that wrote out-of-the-money S&P 500 options.
In Depth: Income Generation and Option-Selling Strategies
Whitepapers
Harvesting The Equity Insurance Risk Premium: Know Your Options
Aon Hewitt
Download Whitepaper
Videos and Webinars
Option-Selling Strategy Indices
Strategy Diagrams and Descriptions
There are important risks associated with transacting in any of the Cboe Company
products or any digital assets discussed here. Before engaging in any transactions
in those products or digital assets, it is important for market participants to carefully
review the disclosures and disclaimers contained
here.
These products and digital assets are complex and are suitable only for sophisticated
market participants.
These products involve the risk of loss, which can be substantial and, depending on the
type of product, can exceed the amount of money deposited in establishing the position.
Market participants should put at risk only funds that they can afford to lose without
affecting their lifestyle.
\n
Goals\n
\n Goals of cash-secured index putwrite strategies may include: (1) improve income from\n a cash or cash equivalent holding, and (2) receive upfront premium income in\n exchange for potential drawdown.\n \n \n\n
\n
Strategy\n
\n To implement an index cash-secured putwrite strategy: (1) sell index put options,\n and (2) hold cash or cash equivalents (e.g., Treasury bills) to fully collateralize\n the short options position, in an amount equal to the maximum possible loss of the\n short put position.\n \n \n \n\n \n
Comments\n
\n The strategy (1) is often used to boost income from a holding of Treasury bills, (2) usually\n has a lower risk than a related stock index, (3) tends to outperform a related stock index\n when the stock markets are in range-bound or bearish regimes, (e.g., in 2008 and 2022), and\n underperform in bull market regimes (from 2012 to 2014, and in 2019).\n \n"; CTX['webinarBaseUrl'] = '/us/index_income';
Income Generation
Strategy Indices
Cboe Global Indices strategy indices are used by investors to explore various strategies - like income generation.
Performance Tracking
Indices designed for income generation track the hypothetical performance of selling options compared to traditional investments.
Strategy Benefits
BuyWrite strategies and PutWrite strategies often have experienced less volatility, lower Betas, and less severe drawdowns than related stock indices.
Monthly Premium Income
The chart below shows the gross amount of yield as a percentage of the underlying values held for the BXR, BXM and BXY Indices.
The BXR Index had the highest yield because the Russell 2000 Index was more volatile than the S&P 500 Index, and the BXR and BXM indices that wrote at-the-money index options generated more gross premium than the BXY Index that wrote out-of-the-money S&P 500 options.
In Depth: Income Generation and Option-Selling Strategies
Whitepapers
Harvesting The Equity Insurance Risk Premium: Know Your Options
Aon Hewitt
Download WhitepaperVideos and Webinars
Option-Selling Strategy Indices
Strategy Diagrams and Descriptions
There are important risks associated with transacting in any of the Cboe Company products or any digital assets discussed here. Before engaging in any transactions in those products or digital assets, it is important for market participants to carefully review the disclosures and disclaimers contained here. These products and digital assets are complex and are suitable only for sophisticated market participants. These products involve the risk of loss, which can be substantial and, depending on the type of product, can exceed the amount of money deposited in establishing the position. Market participants should put at risk only funds that they can afford to lose without affecting their lifestyle.