Options Overlays Help Manage Event Risk
Options strategies is back on the agenda for portfolio managers as hedging costs, volatility and event risk changes the risk calculus.
Options can provide targeted protection around earnings, elections or policy meetings. The cost depends heavily on implied volatility, so timing and structure matter.
Overlays are most effective when the objective is explicitly defined and the budget is sized in advance.
The main risk is high hedging costs and basis risk. Investors should watch implied volatility, skew and event calendars in the sessions ahead.
This article is provided for information and educational purposes only and does not constitute investment advice. Market conditions can change, and past performance is not a guarantee of future results.