Do buy-write strategies work on Australian equities?
A “covered call” or “buy write” strategy involves selling call options against an investor’s share portfolio to gain extra income. By selling a call, investors earn income in exchange for giving up the right to some upside share price appreciation, if the share prices rise beyond a certain level (these are called ‘premiums’). So does a buy-write strategy over an Australian equities portfolio generate better results? According to recent research, compared to a traditional “buy and hold” strategy, a “buy write” strategy over Australian equities has the potential to provide enhanced income as well as attractive risk-adjusted returns by reducing overall volatility of total returns. For more click the link: (VIEW LINK)
Author, columnist, investment strategist and macro-economist. Previous roles at Federal Treasury, OECD, Macquarie Bank and AFR. I develop economic insights and portfolio construction strategies for BetaShares' retail and adviser clients.