PowerShares is preparing to launch the first family of BuyWrite ETFs, which provide cost-efficient access to buy-write options strategies on three of the most widely used benchmarks in the
PowerShares is preparing to launch the first family of BuyWrite ETFs, which provide cost-efficient access to buy-write options strategies on three of the most widely used benchmarks in the world – the S&P 500, Dow Jones Industrial Average and NASDAQ-100 Indexes.
Buy-write strategies are often used to reduce volatility under certain market conditions, as well as provide additional income to a portfolio through call option premiums. In down markets, for example, the option premiums received mitigates the price decline in an equity portfolio.
The trade-off is that in strong equity markets, the upside potential of the equity investment is reduced as the option is exercised above the strike price.
Anticipated on 20 December, the first three BuyWrite ETFs will be the PowerShares S&P 500 BuyWrite Portfolio; PowerShares DJIA BuyWrite Portfolio; and PowerShares NASDAQ-100 BuyWrite Portfolio.
