ETFs have transformed the way individuals, advisors and institutions alike think about investing. In this turbulent, low-interest-rate environment, many investors have turned to the options market as a way to manage risk and enhance the yield of their portfolios.
As ETFs have grown, so too has the options market. In fact, options on ETFs dominate the traded volume on the U.S. options equity market. Traders and investors can find narrow bid/ask spreads for ETF options, making it attractive to enter into combination and complex options strategies.
Still, options trading can be an unfamiliar topic for many investors and advisors.
That’s why ETF.com has partnered with Cboe Vest Technologies, which is an indirect affiliate of Cboe Global Markets, the parent company of ETF.com. Vest Technologies, a software company focusing on target-outcome investment strategies, is providing options data on our fund reports, as well as a new tool, the Options Strategy Builder.
Along with our continued options education, we hope this tool can help ETF investors make smart decisions about whether options strategies are right for them.
This new tool can be found in our fund reports that have an “Options” tab, which will only appear when there’s sufficient volume in the ETF’s options to make a strategy viable. Currently, there are approximately 80 ETFs featuring the tab.
The new tool allows users to test two popular option strategies, the collar (protection strategy) and the covered call (income strategy).
For a larger view, please click on the image above.
Through the tool, users can visualize multiple risk/reward scenarios and see the potential profit and loss based on the previous business day’s closing price of the ETF. Moreover, the tool displays the options and stocks positions necessary to construct each strategy, as well as the estimated total costs to implement it.
For a larger view, please click on the image above.
Feel free to check out this new tool and provide any feedback to [email protected]. If you are interested in learning more about options, you can start by visiting our Options ETF Channel, where you can find articles ranging from core principles to more advanced topics.
Over the coming months, we plan to add more options content and tools to our website to help investors better understand how options can be a useful way to achieve their investment goals.
| ETFs 301: ETF OPTIONS | |
You can reach us at [email protected].
