Low Volatility Equity – It’s Never Too Late
Chief Market Strategist discusses the benefits of Gateway’s index options-based strategy in today’s uncertain markets.
- Although the market environment brought on by the COVID pandemic has been challenging, the index option market has been running smoothly.
- Gateway uses a low-volatility equity strategy designed to participate in market advances and protect during market declines.
- For investors looking for a cautious way to participate in the long-term returns of the equity market, now may be a great time to evaluate cashflow-based approaches like the Gateway strategy.
This material is provided for informational purposes only and should not be construed as investment advice.
Index option (European-style expiration, cash settled and exchange-traded): an option contract on an index (e.g., S&P 500) in which the buyer (owner) pays a cash premium up front to the seller (writer) of the option. If at expiration, the option contract is in-the-money, the seller pays the owner cash in the amount of the difference between the option strike price and the current value of the index; otherwise, the option expires worthless for the buyer and the seller keeps the full premium received up front. The writer of an option is paid a cash premium for taking on the risk associated with the option obligation to pay if the option expires in-the-money. Listed index options contracts can be closed or traded prior to expiration date, but not exercised. Volatility management techniques may result in periods of loss and underperformance, may limit the Fund's ability to participate in rising markets and may increase transaction costs. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All investing involves risk, including the risk of loss. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment, or investment strategy, prior to investing.