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How Institutional Investors Use and Think About Exchange-listed Options

The Options Industry Council Sponsored Webinar

How Institutional Investors Use and Think About Exchange-listed Options

FREE WEBINAR
Tuesday, June 19 | 12:00 – 1:00 PM

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Greenwich Study: Options and the Institutional Investor>>

A summary of findings from a joint project with Greenwich Associates and The Options Industry Council


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The Options Industry Council (OIC), a resource funded by OCC, the world’s largest equity derivatives clearing organization, has sponsored a new research study, How Institutional Investors Use and Think About Exchange-listed Options. The study was conducted by Greenwich Associates, a global research and consulting firm. Many public and corporate pension retirement systems worldwide are confronted with lower investment returns on existing assets that currently underfund the ultimate financial obligations of those plans. As a result, pension plans have been exploring different investment strategies and exposure to alternative asset classes. Between December 2017 and March 2018, Greenwich Associates interviewed 80 institutional investors in the U.S., incorporating a mix of asset managers, corporate pension plans and public pension plans. Respondents were asked a series of questions seeking to understand their perceptions of listed options strategies and to explore how institutional investors utilize exchange-listed equity options to achieve investment goals.

Learning Outcome Statements

  • The market overwhelmingly accepts that options can add value to an investment strategy. Only four percent of respondents disagree with the notion that incorporating options strategies can improve the risk-adjusted return profile of a fund or investment portfolio.
  • Those investors that utilize listed options strategies are very happy with performance against major market benchmarks with 81% expressing satisfaction.
  • Institutional investors primarily look to implement listed options strategies for portfolio protection.
  • Pension plans and endowments may be overlooking investments in options strategies as a means to improve risk-adjusted returns.
  • Exchange-listed options are considered superior to OTC options across a number of factors, including realtime price discovery, greater transparency, lower regulatory complexity and reduced counterparty risk.
  • Investors utilize a variety of different types of protective and income generating options strategies including: covered call writing, protective puts, cash-secured put writing and protective collars.
  • When deciding to implement listed options strategies, Chief Investment Officer buy-in is the key decision factor, and the due diligence process typically takes less than a year.

 

 

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