WHO SHOULD CONSIDER
PARAMETRIC DELTASHIFT?
Investors seeking to enhance income or total return from a concentrated equity position.
Investors seeking to implement a disciplined sales program — selling portions of concentrated stock position at higher than current market values, or earning premium income in the meantime.
In both cases, investors benefit from having an additional tool in a comprehensive diversification plan—Parametric DeltaShift can be used alongside other methods, such as hedging, charitable giving and exchange funds.
Real life cases*
- A retired executive has significant concentrated stock from his company and wants to enhance total return with a targeted sale price. The client decided to sell the position if the stock reached a target price. Parametric Risk Advisors developed a custom call writing strategy designed to increase the total return of the stock position and effect sales at or near target levels.
- A private foundation holds a large position in a single stock and wants to enhance return. The foundation was required in their charter to hold a significant amount of stock, concentrated in a single company. Parametric Risk Advisors developed a covered call writing program that sought to enhance their total return and reduce the volatility of the foundation's portfolio, while attempting to minimize any sale of stock. Over the first year of the program, the stock appreciated more than 30%, but because the options were written slightly out-of-the-money and over short maturities, in this example, none of the underlying stock was called away.
* The above examples are not an indication of the experience of all Parametric clients. It should not be presumed that any strategies employed will be profitable or will equal the experience of the above examples.
KEY PARAMETRIC DELTASHIFT BENEFITS:
- Current income
- Reduced portfolio volatility
- Designed to maintain significant participation in dramatic upward price movements
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