High Probability Options Strategy

Income without interest rate risk
ZEGA’s idea of alternative income is to capture the option premium generated by volatility in the stock market. The strategy is called the High Probability Options Strategy – or HiPOS. Our tactics can add income to a portfolio without exposure to rising interest rates. And, we let the client set the dial for capital at risk. The strategy’s returns, non-correlated to both equities and bonds, are driven by your clients’ comfort with risk.

What is it?cropped-ZEGA-FINANCIAL-LOGO-SYMBOL.png

  • HiPOS is an alternative – options based strategy
  • Aggressive version has averaged double digit returns annually since it’s 2010 inception
  • Has had returns with a historically low correlation to US equity or US fixed income
  • Has never had a negative calendar year

Potential Benefits:

A Different Monthly ‘Alternative Income’ Solution

  • Lower volatility than benchmarks
  • Can be used to generate monthly returns
  • Portfolio is highly liquid
  • Sophisticated strategy with the transparency and low fees of an SMA structure
  • Offered in 4 versions based on risk profile: Income, Moderate Growth, Aggressive Growth, and Conservative

Portfolio Fit: 

A Complementary Fit in a Portfolio – Not a Core Holding

  • Aggressive ⇒ for clients looking for a growth allocation
  • Moderate ⇒ can be used along side any equity allocation
  • Income & Conservative ⇒ as a supplement to fixed income

Risks:

Market Decline Represents Most Significant Risk to Strategy

Black Swan Risk:

  • Markets can move suddenly, swiftly, and without notice.
  • The strategy uses options to create implied leverage meaning it controls more shares than it could otherwise purchase with the same amount of capital.
  • In a sharp downward moving market, the loss in the strategy may accelerate quickly because of the implied leverage – it depends on the conditions of the trade cycle.
  • We describe this risk as the “Black Swan” risk that the strategy carries.

HiPOS Aggressive Growth

 as of 3/31/2017 MTD QTD YTD 1 Year 3 Year 5 Year ITD
HiPOS Gross 1.8% 4.3% 4.3% 11.3% 8.8% 19.9% 23.0%
HiPOS Net* 1.6% 3.9% 3.9% 9.6% 7.2% 18.2% 21.2%
Benchmark** 1.4% 14.9% 14.9% 50.1% 11.2% 16.8% 16.1%

HiPOS Moderate Growth

 as of 3/31/2017 MTD QTD YTD 1 Year 3 Year 5 Year ITD
HiPOS Gross 1.1% 2.6% 2.6% 6.7% 5.6% 8.1%
HiPOS Net* 0.9% 2.2% 2.2% 5.1% 4.1% 6.5%
Benchmark** 1.0% 8.6% 8.6% 14.9% 8.3% 11.9%

HiPOS Income

 as of 3/31/2017 MTD QTD YTD 1 Year 3 Year 5 Year ITD
HiPOS Gross 0.9% 2.1% 2.1% 5.7% 3.4% 4.2%
HiPOS Net* 0.7% 1.8% 1.8% 4.1% 1.9% 2.6%
Benchmark** 0.0% 0.8% 0.8% 0.4% 2.7% 1.8%

HiPOS Conservative

 as of 3/31/2017 MTD QTD YTD 1 Year 3 Year 5 Year ITD
HiPOS Gross 1.6% 3.3% 3.3% 10.1% 5.6% 7.2%
HiPOS Net* 1.4% 3.0% 3.0% 8.5% 4.0% 5.6%
Benchmark** 0.4% 3.7% 3.7% 13.1% 7.1% 7.6%
*Performance numbers displayed net of fees include a 1.50% fee; this fee is an estimate which reflects both ZEGA’s management fee and the fee charged by the advisor to the client.
**Benchmark for Aggressive Growth is the US ETF Trading – Leveraged Equity Index, benchmark for Moderate Growth is the US ETF Trading – Leveraged Equity Index, benchmark for Income is the Barclays US AGG Bond TR, benchmark for Conservative is the CBOE S&P 500 Put Write Index

 Tear Sheet 

 Presentation

 White Paper

HiPOS Aggressive Growth

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HiPOS Moderate Growth

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HiPOS Income

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HiPOS Conservative

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CONTACT US

777 South Flagler Drive Suite 800 West Tower, West Palm Beach, FL 33401 Service@ZEGAFinancial.com

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  Disclosures  |  Copyright 2016 ZEGA Financial. All rights reserved.

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