​Overwriting Amid Growth In Localized Shocks

Falling bank balance sheets, the rise in high frequency trading and the artificial suppression of risks by central banks is accentuating localized market shocks. Overwriting through the use of weekly options, however, can combat the growth of localized tails that have recently caused the strategy to underperform while tactically managing covered call programs can further enhance performance, according to Benjamin Bowler, co-head of global equity derivatives research at Bank of America Merrill Lynch.