The idea: Incorporate short-term levered plays including covered call and collar strategies in order to help investors customize their own defensive strategies.
Andrew McOrmond, managing director at WallachBeth Capital, joined Slavin on"ETF Edge" to explain how investors can hold defensive, risk-averse positions using leveraged products.Covered calls grant protection to clients looking to minimize losses, McOrmond said. These short-term levered plays better define outcomes, but in turn investors may miss out on gains.
"If you sell options, and the market moves against you, you'll be protected — but you're going to just reduce your upside [potential]," he explained, noting covered calls are"the only option" for risk-averse clients because hedging is complicated for the individual.
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