• Rapid interest rate increases, high inflation, monetary policy shifts and geopolitical tensions have fueled market uncertainty in 2023.
  • Even so, implied volatility as measured by the VIX® (Cboe® Volatility Index) has been below its historical average since 1990.
  • In this environment, some investors believed that any bout of volatility would recede quickly, and began shorting volatility by betting against short-term futures tied to the VIX®.
  • While this was a popular strategy in the low-volatility quantitative easing era, making a directional bet on volatility through shorting runs the risk of unlimited potential loss.
  • A different strategy – options-based strategies that sell volatility – may allow investors to capture the difference between realized and implied volatility (the Volatility Risk Premium) while generating cash flow.
  • Since 1977, Gateway’s index options-based strategies have had steady track records and consistent risk profiles – and are poised to continue benefitting from the current market environment.
Past performance is no guarantee of future results.

Options may be used for hedging purposes, but also entail risks related to liquidity, market conditions and credit that may increase volatility. Investing involves risk, including the risk of loss.