Second, managing these strategies can be time consuming, and because of the inherent multiplier in most listed options, caution and due diligence are warranted— another reason for consulting a specialty firm.
Ultimately, for advisors who find themselves concerned with a client’s portfolio composition in the current market environment, a number of effective strategies exist to rebalance risk without incurring a taxable event. Overlaying the portfolio with an options strategy is one, and represents a viable mechanism, leading to greater comfort and reassurance for advisor and client alike.
Eric Metz is president and chief investment officer of SpiderRock Advisors, a tech-enabled asset manager providing options strategies to institutions and other Registered Investment Advisors.