For those not aware, the bloom is off the rose right now as equity markets are on track to record the biggest string of down days in a long time. With the media distracting every investor re: FB’s IPO, the fact is, equities markets in general are confounding long-only fund managers.
The good news is that a growing number of institutional fund managers, and L/S hedge fund managers are going back to basics and revisiting the use of writing calls against positions that don’t necessarily move in a straight-up line.
The chart below is a good teaser illustrating the performance of select ETF covered writing performances, and a good lead in for the Seeking Alpha article that does a good job of framing the covered writing ‘argument’ for any fund manager that doesn’t use options in the course of their fiduciary obligation to minimize volatility and enhance alpha
