Coping with rising interest rates and market volatility


As investors have struggled to cope with volatility and rising interest rates, there is increased interest in tools that can be used to achieve the goals of managing portfolio risk, increasing income, and enhancing long-term risk-adjusted returns.

This presentation will discuss –

  • A number of risk-management strategies and related benchmark indices, including the protective put, the buy-write, the collateralized put-write, the protective collar, and the use of futures and options on the CBOE Volatility Index (VIX) that measures implied volatility. Thirty years of historical data show that certain options-based benchmark indices have generated attractive risk-adjusted returns, with stock-like returns and bond-like volatility.
  • A key source of return for options writers has been a persistence of volatility risk premium for index options.
  • Increased use of option-writing strategies by pension funds and mutual funds.
  • Studies by Wilshire Associates, Hewitt EnnisKnupp, Ibbotson Associates, Asset Consulting Group, Cambridge Associates, Russell Investments, and Callan Associates.
  • A new 2018 study with an analysis of performance of options-based funds.
  • Benefits and disadvantages of key options strategies