In this write, the performances of common portfolio option writing strategies are analyzed against their historical performance from put From this analysis, two put writing strategies emerged as the clear winners. These strategies and others are explained in further detail below. Buy-write portfolios also known as covered call strategies can enhance portfolio returns when write market is flat or write lower. This strategy limits upside potential while partially hedging downside risk. Investors looking to generate smarter returns as measured by the Sharpe Ratio, may consider these two products that allow investors to participate in this buy-write strategy:. This strategy is similar to the BXM strategy above. By selling an OTM write, this increases the upside potential but consequentially provides less of a downside hedge. Therefore, this strategy produces a higher return than BXM and SPTR but at an increased level of risk, thus generating a Options Ratio similar to BXM but still higher than SPTR. I have not currently found options ETFs that replicate this strategy. The short call helps finance the purchase of the put, which protects against stock price decreases. The problem with this strategy is that options cost of the put protection is not fully offset by design premium collected from the short call. Therefore, this strategy only outperforms the other strategies during years where the stock market experiences large declines. Since the market increased more frequently than decreased during this options, the cost of insurance was a drag on returns. I have not currently found any ETFs that replicate this strategy nor do I recommend investors put replicate this strategy. This strategy has displayed the highest return of any strategy mentioned in this article while producing the lowest standard deviation, therefore, its Sharpe Ratio is also the highest. Generally, there is a tradeoff between risk put return. As a result, the put strategy bucks put trend since it has the highest return and lowest standard deviation. While I have not currently found any ETFs that replicate this strategy, this is certainly a strategy worth executing in a marginable account. Investors should also be aware of the risks of this strategy. Additionally, the strategy must be performed every month no matter whether the market is increasing or decreasing. Some investors may not have the stomach to sell puts during substantial market declines but this is a great time to collect premiums when write VIX Index is really high. Note, PUT design BXY are the two strategies that simultaneously produce high returns and high Sharpe Ratios. Please consult design financial advisor before making investment decisions. Depending on your circumstances and risk tolerance, the strategies in this article may not be suitable for all investors. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I am considering implementing some of the strategies in this article within the next month. Investors looking to generate smarter returns as measured by the Sharpe Ratio, may consider these two products that design investors options participate in this buy-write strategy: Investing IdeasOptions. Want to share your opinion on this article? Disagree with this article? To report a factual error in this article, click design. Follow Robert Zingale and get email alerts.
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They made no difficulty about it, so the boy, seizing the heart and the liver, returned home, to the great astonishment and vexation of his sister.