In the past week we are once again reminded of the risk inherent in holding un-hedged single concentrated stocks. We know historically non-diversified holdings of a single issue have more than double the expected volatility or standard deviation than the market indexes.
In a special Halloween HiPOS blog edition, we announce that ZEGA executed a new position consisting of a short put spread on the S&P 500 Index (SPX).
This week as the S&P 500 Index again peaked its head above the 3000 level, I received a question about whether they should sell their stocks due to all the talk about potential recessions. I’ve said before many times, predictions of a recessions beginning and end, and most importantly have been flawed and often wrong.
After our last HiPOS position expired at full profit the ZEGA trading team is hard at work scouring the market for a position that would qualify under our strict rules. However, that has not materialized yet. One reason is that volatility as illustrated above in the VIX Index chart, has shrunk of late.
Jay broke down how ZEGA sells premium when volatility is slightly elevated. See Jay’s video with Oliver Renick today on Morning Trade Live at TD Ameritrade Network.
As the 3rd quarter is in the books it is once again time to look at our Hedged Equity Comparison peer review. The table above illustrates the performance for ZEGA’s Buy and Hedge Retirement Strategy against similar strategies in the space.