Please help improve it or discuss these issues on the talk page. This article’s tone or style may not reflect the encyclopedic tone cboe binary options on the volatility index on Wikipedia.
See Wikipedia’s guide to writing better articles for suggestions. This article’s use of external links may not follow Wikipedia’s policies or guidelines. The term buy-write is used to describe an investment strategy in which the investor buys stocks and writes call options against the stock position. The writing of the call option provides extra income for an investor who is willing to forgo some upside potential. However, prior to 2002 there was no major benchmark for buy-write strategies. Investors have used covered call strategies for more than three decades.
Buy Writing Makes Comeback as Way to Hedge Risk. The BXM Index won the Most Innovative Benchmark Index award at the 2004 Super Bowl of Indexing Conference. With the performance of the strategy in the late 2000s decade, people are not very interested anymore. Call writing works well in flat markets, but it loses a lot in downturns, then does not get it back when the market turns up. The Figure above shows a 3-Dimensional plot of expiry value versus stock price for FCX on expiry saturday versus the option purchased.
Buy-Write’ Managers Feel a Chill – WSJ”. When It Works, It Offers Both Yield Enhancement and Risk Management. Maintaining Speed — In a Sideways or Falling Market, Writing Covered Call Options Is One Way To Give Your Clients Some Traction. An Array of Options – A Buy-write Strategy Can Add Some Octane to Portfolios When the Markets Lack Direction. Buy-Write Strategy Could Help in Sideways Market. Finding Alpha via Covered Index Writing. Mass Appeal It’s Still a Niche Market, But More Assets Are Flowing Into Mutual Funds That Use Hedge Fund Techniques.