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Option Income Strategies Design

In: Derivatives Applications in Asset Management

Author

Listed:
  • John Burrello

    (Invesco Global Strategies)

  • Frank J. Fabozzi

    (Johns Hopkins University)

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.

Suggested Citation

  • John Burrello & Frank J. Fabozzi, 2025. "Option Income Strategies Design," Springer Books, in: Frank J. Fabozzi & Marielle de Jong (ed.), Derivatives Applications in Asset Management, chapter 0, pages 139-150, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-86354-7_8
    DOI: 10.1007/978-3-031-86354-7_8
    as

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