Benefits of SSO
The SSO process has significant advantages which we believe will add value to your portfolios.
Selective vs. Continuous Writing - Our experience has demonstrated that continuously writing options to achieve a certain level of distributions is not effective. Therefore, our quantitative technical based methodology identifies appropriate times to write and/or close out positions compared to writing all the time. This allows clients to benefit when share price appreciation is expected to be greater than the option premium and generates the maximum total return for investors.
Active Management - Once option positions are put on, we continuously monitor them to evaluate whether the trade is working as expected. We will harvest gains prior to expiry to ensure the position doesn't turn against us and close out losing trades to minimize losses in response to changing market conditions.
Bespoke Option Writing - In addition to exchange traded options we extensively utilize the over-the-counter ("OTC") market with multiple Canadian and US counterparties in order to customize our exposure. The OTC market allows us to stagger expiry dates, set different strike prices to meet specific portfolio requirements that may not be possible with exchange traded options and have the ability to close out positions without suffering a large bid/ask spread.
Use of Protective Puts - Our quantitative model also signals when downside risk is rising and portfolio insurance in the form of protective puts may be appropriate. Puts are a cost effective and efficient means of protecting value in the portfolio while minimizing cash drag and remaining fully invested to allow the portfolio to rebound as markets come back.
The primary benefit to investors is to maximize the total return of the particular portfolio while reducing the level of volatility or swings in the value of the portfolio, which thereby increases the risk-adjusted return.