Index Income | Separately Managed Account
The investment objective of the Index Income SMA seeks positive monthly cashflow from option premiums. The strategy employs a long-term, time-decay, premium-capture put credit spread on the S&P 500 or similarly situated exchange-traded funds (ETFs).
Seeks cash-flow in exchange for additional market volatility in existing portfolio.
Targets additional income alongside dividends and interest.
The purchase of a long put as part of the spread limits downside risk.
Underlying portfolio can be managed by us or the client.
SMA Portfolio Construction
1ST | Universe
S&P 500 ETF or Index options.
2ND | Evaluate
Consider current market conditions and expected volatility measures to determine proper entry points for put credit spreads.
3RD | Execute
Sell a short out-of-the-money put option typically 3-5% below current levels of the S&P 500, while simultaneously purchasing a long out-ofthe-money put option, typically 15% below the short put option strike price at the same expiration, which creates a put credit spread.