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Applications of stock index options for income enhancement

Author

Listed:
  • John Burrello

    (Invesco)

  • Frank J. Fabozzi

    (Johns Hopkins University)

  • Han Liang

    (Invesco)

  • Anil Sood

    (Ernst & Young LLP)

  • Kari Vatanen

    (Elo Pension Insurance Company)

Abstract

Three real-world applications of derivatives in managing equity portfolios focusing on enhancing income using stock index options are illustrated in this article. Where these strategies are applied, providing practical examples and detailed analyses of their outcomes, is explained. The common pitfalls of option income strategies, particularly the impact of market volatility on yields, and how adjusting strike prices systematically can help achieve more stable income are described. This strategic insight is crucial for portfolio managers looking to enhance their income while managing risk effectively in their equity portfolios.

Suggested Citation

  • John Burrello & Frank J. Fabozzi & Han Liang & Anil Sood & Kari Vatanen, 2024. "Applications of stock index options for income enhancement," Journal of Asset Management, Palgrave Macmillan, vol. 25(6), pages 579-588, October.
    • Handle: RePEc:pal:assmgt:v:25:y:2024:i:6:d:10.1057_s41260-024-00366-z
    DOI: 10.1057/s41260-024-00366-z
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