It's an interesting product with a lot of potential uses. In the interest of full-disclosure, I wish the interview had mentioned that since you own options, not the actual underlying shares, you do not participate in gains from dividends. I'm glad they (briefly) covered buying/selling at times that are not on the 12-month boundary. Seems like a complicated topic to me, I wouldn't mind knowing more of the details for this. Also, maybe I just didn't "get it" but does, say, the Buffer and Cap kick in only at the 12 month boundary? Or are they exercised daily at market close? For example, if the overall index is down 20% for July 17th, does your investment only experience a 5% loss on that day? If there is a 20% gain on Feb 11th, do you only get a 13% gain that day? I assume it is "daily at market close" but did not hear it explicitly stated.
I'm sure they are using put options for the downside protection. If the puts expire at the end of the term you won't get a 1-to-1 tracking of the index due to time value remaining on the puts. If they are using monthlies then you might get better tracking at the cost of rolling them each month. Compare the charts to the underlying index to get a better idea of how closely they track each day.
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It's an interesting product with a lot of potential uses. In the interest of full-disclosure, I wish the interview had mentioned that since you own options, not the actual underlying shares, you do not participate in gains from dividends.
I'm glad they (briefly) covered buying/selling at times that are not on the 12-month boundary. Seems like a complicated topic to me, I wouldn't mind knowing more of the details for this.
Also, maybe I just didn't "get it" but does, say, the Buffer and Cap kick in only at the 12 month boundary? Or are they exercised daily at market close? For example, if the overall index is down 20% for July 17th, does your investment only experience a 5% loss on that day? If there is a 20% gain on Feb 11th, do you only get a 13% gain that day? I assume it is "daily at market close" but did not hear it explicitly stated.
I'm sure they are using put options for the downside protection. If the puts expire at the end of the term you won't get a 1-to-1 tracking of the index due to time value remaining on the puts. If they are using monthlies then you might get better tracking at the cost of rolling them each month. Compare the charts to the underlying index to get a better idea of how closely they track each day.