Enhanced Call-Writing Strategies
Today, while browsing the most active tracker certificates in the Swiss market, see page 4, there were two Credit Suisse products that caught my attention:
1) CS Swiss Equity Enhanced Call Writing Index, and
2) Credit Suisse EU Equity Enhanced Call Writing CHF Total Return Index
It’s surprising to see Credit Suisse products in the most active, as the market is dominated by UBS, Vontobel and Julius Bär. So I thought: this must be a product that is either unique or being phased out of customer accounts, a legacy product that UBS wants to get rid of maybe. Reading about the strategy though, makes me think it could be the former.
“You can achieve long-term returns commensurate with stock market returns but with lower volatility and less downside risk. The trick is to combine stocks with call options by “writing” a call against a stock you already own. Professional investment managers have been using this strategy for years, and recent developments have now made it easier for individual investors to employ it as well.”
Background on Enhanced Call-Writing Strategies can be found at
https://www.wiley.com : New Insights on Covered Call Writing: The Powerful Technique That Enhances Return and Lowers Risk in Stock Investing
The termsheet can be found at:
https://www.six-structured-products.com/de/zertifikat/-CH0373575841
A 2019 article on the new products success can be found at:
https://www.structuredretailproducts.com/news/details/75022
“Landmark transactions in ITS included SMI Income Maximizer certificate, a flow structured product which was distributed among private banking clients in Switzerland and collected sales of US$175m. The open-ended certificate tracks the CS Swiss Equity Enhanced Call Writing Index and is available in two tranches: one with a minimum denomination of CHF500k (CH0373575833) and one with a denomination of CHF1k (CH0373575841).”
Also this one in german is interesting:
https://www.payoff.ch/news/smi-income-maximizer/