These types of policy changes often create volatility, so while one of our fundamental beliefs is that equity markets move higher over time and will provide a good long-term return, we also believe that there are times where additional protection is desirable.
Since we joined Q Wealth Partners, we’ve had the ability to use a collared option strategy. This acts like a safety net for your investments, reducing potential losses while still allowing for reasonable gains. The strategy involves buying a put option to protect against a decline in the market while simultaneously selling an off-setting call option to generate income to help pay for the put option. It effectively limits the loss an investor may experience if the market declines, at a minimal cost. The strategy may also reduce returns, so we regularly review our option positions to determine how much exposure we are comfortable having for each of these positions.
We’ve recently increased the amount of protection we have through these collared options. This reduces the downside risk in your investments, while providing room for further gains if the market continues to be strong in 2025. We continue to work to enhance the returns and/or reduce the risk in our pools. We hope that strategies like this provide you with an added layer of confidence in these uncertain times.
If you have any questions or want to discuss how this might affect your financial strategy, feel free to reach out.
Mike Holden
Founding Partner, Elevate Wealth Management
Portfolio Manager, Quintessence Wealth
