Protection for Less

Highlights

• In today’s uncertain environment for inflation and interest rates, portfolio protection may be on the minds of many investors.
• If the Federal Reserve keeps rates higher for longer, the interest rate component of written option strategies could have a positive effect on return moving forward.
• For investors who purchase put options as a source of defense, higher interest rates have helped lower the cost of protection.
• The buyer of a put option has the right, not an obligation, to sell a security at a pre-determined price within a pre-determined timeframe.
• The cost of index put options has declined in 2023 and is near its lowest level in 15 years as implied volatility has settled down.
• Gateway’s active approach to using options to manage risk can help investors by taking advantage of fluctuation pricing dynamics.