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White paper

Aug. 30, 2021

Know What You Own

Understanding the Diversity of Options Strategies

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White Paper — Overview

The universe of Options-Based strategies is expanding rapidly as investors explore ways to better manage risks and pursue their investment needs and objectives in a low-yield world. However, options utilization can be overwhelming with all there is to know about evaluating them, so in this paper we:
  1. Discuss and critique Morningstar’s laggard approach to classifying option-based strategies, to help due diligence and investment selection processes.
  2. Propose our three-tiered system of separating strategies in this category: hedging, income, and alpha
  3. Outline the objectives, pros, cons, and risks of each of those three broad strategies
  4. Discuss the Defined Risk Strategy within the framework we established

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