ETF News: Do You Know Your Options?

There’s no denying that we are in a treacherous market right now, but did you know that thanks to a new exchange-traded fund (ETF) from PowerShares you do indeed have a few options?

The options I am talking about here aren’t just a matter of choices. Rather, the options I am speaking of here come via the new PowerShares S&P 500 BuyWrite Portfolio (PBP).

Launched in December 2007, PowerShares S&P 500 BuyWrite Portfolio provides cost-efficient access to buy-write options strategies on one of the most widely used benchmarks in the world, the S&P 500 Index. Buy-write strategies are often used to reduce volatility under certain market conditions, as well as to provide additional income to a portfolio through call option premiums.

In down markets, the option premiums received mitigate the price decline in an equity portfolio. The trade-off is that in strong equity markets, the upside potential of the equity investment is reduced as the option is exercised above the strike price.

If you aren’t familiar with options, you might want to get yourselves familiar by finding out more about PBP. If you already are familiar with options, or if you find the need to take some kind of aggressive action during this market sell off, I recommend you find out more about this new ETF by clicking here.