- A put sale means disposing of an option on a share with a contract to buy it back subsequently within a pre-set period at a lower price. The strike price (at which you must buy back the share) is determined in advance. If share value drops below the strike price, the investor holds insurance on the share’s value in exchange for a premium.
- This strategy is geared to producing an attractive overall return even in a stagnant market.
- Returns in a bull market will be close to or somewhat less than the indexes. Your return does not however depend on the sale of a single put option. Its benefits reside instead in the sale of multiple options. Sector diversification is essential to the strategy’s attractive returns and is similar to that of a traditional portfolio.
- This strategy is supported by a diligent and disciplined application of risk management principles guided by computer applications tailored to the needs of your portfolio. It includes a variety of risk parameters, such as economic sector, percentage premiums desire, currency exchange risk and protection of up to 20% in the event of a market decline.
- It affords tax benefits for taxable portfolios. Nearly two thirds of the returns are in the form of capital gains.
- This strategy offers exposure to international and US markets that generally have significant reduced currency exchange risks.
- We do not leverage.
We maintain excellent sector diversification. Our goal is to exceed the indexes in a high-volatility low return environment by reducing risk specific to individual shares.
Globevest Capital makes every effort to manage risk for all portfolios and keep them healthy, whatever their underlying strategy.
Globevest Capital selects strategic bonds and conduct a variety of studies to determine any credit spreads on corporate bonds and the impact of interest rate hikes and reductions. We also conduct a detailed analysis of the company’s indebtedness.
Globevest Capital makes every effort to manage risk for all portfolios and keep them healthy, whatever their underlying strategy.
Globevest Capital combines different strategies, while keeping most of the portfolio invested in puts, plus stocks and bonds.
Globevest Capital makes every effort to manage risk for all portfolios and keep them healthy, whatever their underlying strategy.
- The sale of covered call options involves the purchase of undervalued shares (or indexes) offering good growth potential.
- Calls on these shares are then sold at a strike price higher than the current price. The premium paid provides a cushion if the shares fall, but purchase of the option limits potential capital gains.
- If calls have not been exercised by their expiration date and the shares still offer good growth potential, new calls can be sold at a strike price based on the new value of the underlying shares.
- Example:
- Purchase of 200 shares at $50 each. Cost: $10,000.
- Sale of 200 call options expiring in one year with the bond to sell them at $60 (a potential 20% gain for the year). Premium of $6 per share ($1,200 in all).
- If, after one year, shares are trading at less than $60, we could sell call options again if we still like the stock. If it is trading above $60, the call will be exercised and we will sell them at $60 each.
In this case, the annual return would have been 32% if the shares had been purchased at $60 at the end of the year. If the shares had grown 0% for the period, the strategy would still have earned 12% from the premiums paid. This 12% would also help to compensate for any drop in share price. In other returns, the return is optimized for given risk tolerance.
Globevest Capital makes every effort to manage risk for all portfolios and keep them healthy, whatever their underlying strategy.
- Shares are purchased according to sector allocations using a fundamental approach.
- Valued shares are combined with growth shares.
- Covered calls may be used to reduce risk on certain shares.
- Shares are held for an average of two or three years.
- Undervalued stocks in high-consolidation sectors are preferred whenever possible.
Globevest Capital makes every effort to manage risk for all portfolios and keep them healthy, whatever their underlying strategy.
- Globevest Capital buys regional and national indexes.
- The periodic use of covered calls reduces risk and boosts earnings.
- We also sell puts on international indexes.
Globevest Capital makes every effort to manage risk for all portfolios and keep them healthy, whatever their underlying strategy.