Adaptive Enhanced Income
Adaptive Enhanced Income calculates call-writing potential across an entire client portfolio rather than merely one position at a time. The account-wide trade list can target an income level (e.g. 0.5% per month) or likelihood of assignment, with optimizations to maximize income while preserving upside potential.
Combine with Market Shield to Create a Dispersion Collar
Where a traditional collar pays for the purchase of downside put protection with the sale of covered calls, Adaptive’s tools facilitate a kind of Dispersion Collar to make use of the diversification in a stock portfolio:
Individual Holdings: Sell covered call options on individual stock names within a portfolio to collect premium income. This captures higher implied volatility premiums specific to individual equities, and can produce positive net income even on a collar with protection.
Index Put Protection: Instead of buying individual puts on each stock (which can be expensive), downside protection is achieved by purchasing protective put options on a broader market index such as the S&P 500 or Nasdaq 100. Index puts are typically less expensive and efficiently hedge diversified market risk.
Cost-Efficiency & Tracking: By leveraging the difference between the higher premiums collected from selling individual stock calls and the lower cost of broad index puts, the strategy optimizes hedging costs while also calculating supplemental puts on individual names to account for index tracking error.
Dispersion Collar tools are available for all user account levels. Advisor Firm plans include the Options Intelligence Report which shows indicative net revenue in a client-friendly single-page report with details on downside protection and call-writing income.