I was going to say "there needs to be an ETF that replicates the CBOE PutWrite Index", but then I stopped and asked Grok. Who recommended two, with these qualifiers:
"Key Differences
WTPI closely aligns with the CBOE S&P 500 PutWrite Index’s core methodology (selling at-the-money puts monthly), though it now tracks a slightly modified index (Volos) rather than the PUT Index directly.
PUTD introduces a dynamic twist, which deviates from the CBOE PUT Index’s fixed strategy but still operates within the put-write framework."
Many thanks for sharing this insight. May I ask the following in relation to my question of last week:
So, this strategy would not help so much with smoothing out stock market corrections in a tail risk event. But it helps to earn money over time and interest on it which (hopefully) makes up for losses during a strong stock market correction, i.e. paying the put strike price / loss on put, with some money left in the pocket afterwards. And at least some mitigation is provided by the increasing volatility premium on the short put when stock markets drop.
"Does that mean that all hedge funds are a waste of time and money? No."
Voila the stingless punchline of all whose bread is buttered by hedge funds. We can all get great returns if we just find the RIGHT hedgie. Search on, search on!
I was going to say "there needs to be an ETF that replicates the CBOE PutWrite Index", but then I stopped and asked Grok. Who recommended two, with these qualifiers:
"Key Differences
WTPI closely aligns with the CBOE S&P 500 PutWrite Index’s core methodology (selling at-the-money puts monthly), though it now tracks a slightly modified index (Volos) rather than the PUT Index directly.
PUTD introduces a dynamic twist, which deviates from the CBOE PUT Index’s fixed strategy but still operates within the put-write framework."
Many thanks for sharing this insight. May I ask the following in relation to my question of last week:
So, this strategy would not help so much with smoothing out stock market corrections in a tail risk event. But it helps to earn money over time and interest on it which (hopefully) makes up for losses during a strong stock market correction, i.e. paying the put strike price / loss on put, with some money left in the pocket afterwards. And at least some mitigation is provided by the increasing volatility premium on the short put when stock markets drop.
Is my understanding is correct?
Yes, I think your understanding is spot on.
"Does that mean that all hedge funds are a waste of time and money? No."
Voila the stingless punchline of all whose bread is buttered by hedge funds. We can all get great returns if we just find the RIGHT hedgie. Search on, search on!