Option Income Strategies Design

John Burrello () and Frank J. Fabozzi
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John Burrello: Invesco Global Strategies
Frank J. Fabozzi: Johns Hopkins University

Chapter Chapter 8 in Derivatives Applications in Asset Management, 2025, pp 139-150 from Springer

Abstract: Abstract Option income strategies have become essential tools in modern portfolio management, offering flexibility to generate consistent cash flow, mitigate risk, and capitalize on market opportunities. This chapter explores the design and implementation of such strategies, emphasizing the alignment between derivatives and underlying portfolios, the management of path dependency, and the balance between income generation and long-term growth. Strategies like covered calls, cash-secured puts, and protective puts are analyzed for their adaptability to various market conditions. Practical considerations, such as the role of options Greeks, margin requirements, and dynamic adjustments, are discussed to ensure effective implementation. The chapter highlights the importance of disciplined execution and ongoing evaluation to optimize outcomes and avoid common pitfalls, providing a robust framework for integrating derivative strategies into portfolio management for both income generation and risk mitigation.

Keywords: Option income strategies; Covered calls; Cash-secured puts; Path dependency; Risk management; Portfolio optimization (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-86354-7_8

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DOI: 10.1007/978-3-031-86354-7_8

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