Bite-Size Strategies - Covered Calls and Bonus Certificates
Our Bite-Size Strategies series provide you with some easy to apply ideas you can share with your clients.
Investing in a range bound market
Our market has been relatively range bound since January 2017. The ASX200 Index has been trading between 5600 and 5950 points.
It is not uncommon for a market to remain range bound for an extended period of time. If your clients feel that this may persist they can look to consider a number of derivative strategies coupled with margin lending for a potentially profitable outcome.
Two of the most common strategies include selling Covered Calls and gearing into Bonus Certificates.
- Gearing with Covered Calls
Clients holding certain approved shares on their margin loan can take advantage from selling a Covered Call. The sold call commits your client to selling their current shares at a predetermined price, on or before a predetermined date. In return for this commitment, your client receives a premium (which is automatically credited to their margin loan account).
If the pre-determined price is never hit then your client’s shares are not sold. They can continue to do this on a regular basis to generate an ongoing additional income from their portfolio.
More information on this strategy can be found on our website.
- Gearing into Bonus Certificates
Leveraged now offer lending on Bonus Certificates - a warrant listed on the ASX that allows investors to profit in a slightly falling, flat or rising market.
These work by offering investors a ‘bonus’ payment as long as a predetermined barrier level is not reached.
More detail on this strategy can be found here.
To find out more about how a margin loan can help your clients build wealth and achieve their financial goals, please contact your Relationship Manager or call Leveraged on 1300 307 807.
Issued by Leveraged Equities Limited (ABN 26 01 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). This information is correct as at 26/9/17 and is for general information purposes only. It is intended for AFS Licence Holders or authorised representatives of AFS Licence Holders only. It is not to be distributed or provided to any other person.