The Index Income Overlay strategy seeks to manufacture cashflow in exchange for the investor accepting some additional volatility in their existing portfolio. The investment goal is for this incremental cash flow income to become a realized gain, either upon expiration of the spread, or sometime in the future if the spread positions need to be “rolled” forward. Option overlay products are not appropriate for all investors. Realized gains and losses can be inconsistent. These are long-term strategies and may not produce capital gains over the short-term.
Seth Hickle, CMT
James Humphries, JD