Options on ETFs & ETFs on options

September 16, 2017 08:00 AM

A problem for investors in the zero-interest-rate period is where to go. “One of the things to consider is that the bond market is extremely overvalued as well, so it is very difficult for investors out there — whether institutional or retail — to find a cheap undervalued place to put their money. Despite these risks, and despite this nervous anticipation of a correction, we do see customers actively engaging in strategies and growing the pie,” Looney says. 

He adds that he has kept his eye on growth in assets under management in the Put Write ETF. “I have seen assets under management grow by close to $100 million during the past year. Clearly, investors see the value in these strategies.”

The development of various options strategies as well as their distribution through ETFs has not only increased the ability of traders to manager their own portfolio, it has fundamentally altered the active/passive investing debate. “With the development of the options-based ETFs that utilize CBOE index benchmark strategies as the baseline for these, we now open the door for a new level of customer penetration,” Looney says. “The ETF makes it much simpler for the customer to engage.”

Not only engage but create portfolios that act more like an actively managed investment than a basic index investment or a standard actively managed mutual fund. It appears that ETFs are providing the value they were designed for.   



Page 2 of 2
About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange.