White paper

Aug. 30, 2021

Know What You Own

Understanding the Diversity of Options Strategies

White Paper — Overview

The universe of Options-Based strategies continues to expand rapidly as investors explore different ways to better manage risks, generate income, or pursue other investment needs and objectives.
 
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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