Andrew McOrmond, managing director at WallachBeth Capital, joined Slavin on"ETF Edge" to explain how investors can hold defensive, risk-averse positions using leveraged products.Covered calls grant protection to clients looking to minimize losses, McOrmond said. These short-term levered plays better define outcomes, but in turn investors may miss out on gains.
"If you sell options, and the market moves against you, you'll be protected — but you're going to just reduce your upside [potential]," he explained, noting covered calls are"the only option" for risk-averse clients because hedging is complicated for the individual.
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