Market Measures

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Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

The market for passive investing in the U.S. Mutual Funds and Exchange Traded Funds totaled more than $22 trillion in 2017. The difference in Mutual Funds and Exchange Traded Funds is primarily due to fees, but can we improve performance with simple options strategies?

The Study:
  • SPY
    • $1,000,000 Account
    • 2005 – 2017
    • Sold 16 Delta Covered Calls with 45 DTE
    • All Options Held to expiration – No Management
  • Compared Strategies:
    • SPY Covered Call (No Assignment Considered)
    • Long SPY (ETF)
    • Long VFINX (Mutual Fund)
Results:

Including all fees, commissions, etc. the simple covered call outperformed both holding the SPY and VFINX passively. But since investing isn’t always about the returns, we also need to consider volatility (risk). Tune in as Tom and Tony examine this risk further and get the key takeaways for retail investing!

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