Eric Metz, Chief Investment Officer, SpiderRock Advisors, met with Julie Cooling, Founder & CEO, RIA Channel to discuss the firm’s derivatives-based strategies.

Regardless of where you sit, 2018 has kept you on your toes reinforcing the facts that equity risk is apparent, interest rates do move, and volatility has reinserted itself across global markets in a variety of asset classes.

Under pressure to explore new ways to hedge their risks while cutting fee expenses, institutions are taking a fresh look at listed options — in some cases, at the expense of hedge funds. In search of great returns and limited risk, individual investors have long used listed options — a contract to buy or sell a security at a particular price — as a way to reduce risk in their portfolios.

Under pressure to explore new ways to hedge their risks while cutting fee expenses, institutions are taking a fresh look at listed options — in some cases, at the expense of hedge funds. In search of great returns and limited risk, individual investors have long used listed options — a contract to buy or sell a security at a particular price — as a way to reduce risk in their portfolios.

Under pressure to explore new ways to hedge their risks while cutting fee expenses, institutions are taking a fresh look at listed options — in some cases, at the expense of hedge funds. In search of great returns and limited risk, individual investors have long used listed options — a contract to buy or sell a security at a particular price — as a way to reduce risk in their portfolios.

Under pressure to explore new ways to hedge their risks while cutting fee expenses, institutions are taking a fresh look at listed options — in some cases, at the expense of hedge funds. In search of great returns and limited risk, individual investors have long used listed options — a contract to buy or sell a security at a particular price — as a way to reduce risk in their portfolios.

Under pressure to explore new ways to hedge their risks while cutting fee expenses, institutions are taking a fresh look at listed options — in some cases, at the expense of hedge funds. In search of great returns and limited risk, individual investors have long used listed options — a contract to buy or sell a security at a particular price — as a way to reduce risk in their portfolios.

As clients near retirement after a nine-year bull run, looking to rebalance an equity-heavy portfolio could be stymied by potential tax hits and less-than-ideal opportunities in fixed income. That’s one reason more advisors are looking at options strategies.

 SpiderRock Advisors, LLC (SpiderRock), a rapidly growing asset management firm focused exclusively on providing customized option overlay strategies to advisors and institutions, today announced that it has entered into an agreement with StratiFi Technologies Inc. (StratiFi)to add StratiFi's investment solutions business to the company. 

Last year, the Chicago-based financial technology company Oranj launched a free wealth management software platform designed to give advisors more time with their clients and lower the cost of implementing technology into a firm's practice. 

According to a 2017 report by Cerulli Associates on usage among advisors who use any options,1 “on average, advisors use options in 21% of their clients’ accounts, and they expect to increase use by 30% in three years.” Furthermore, “One-third of advisors report never using options with conservative clients, and one-third report always using options for highly aggressive clients. This behavior may indicate preconceived ideas about the “riskiness” of adding options to client portfolios.”

The current bull market is a boon for investors, but advisors are understandably wary. Up almost 280 percent since hitting its March 2009 low, record high after record high too often signals a downturn to come. It could be debated that valuations are stretched, and hence they rightly wonder, what will it mean for portfolio allocations?