Seven News Stories on Buy-write Strategy as CBOE Indexes Reach All-Time Highs

Recent interest in option writing has increased as investors cope with low interest rates and sluggish stock markets.

ALL-TIME HIGHS. Four CBOE indexes reached all-time high weekly closing values on January 13, 2012 —

> 866.86 BXM – CBOE S&P 500 BuyWrite Index

> 1082.8 BXY – CBOE S&P 500 2% OTM BuyWrite

> 223.22 BXD – CBOE DJIA BuyWrite Index

> 1138.42 PUT – CBOE S&P 500 PutWrite Index

SEVEN NEWS STORIES. Below are links to recent news stories in the Financial Times, Wall Street Journal, Barron’s, Chicago Sun-Times, and other publications —


Options Strategy Appeals, But Has Price

Chicago Sun-Times

January 15, 2012

By David Roeder

.. PowerShares runs the largest exchange-traded fund that uses the [BXM] technique for the S&P 500, and it reported a 4.21 percent gain for the year. The fund has a ticker symbol PBP. The Fidelity Spartan 500 Index Fund (FUSEX), in contrast, gained just 1.98 percent. So Brodsky is right about covered calls as opposed to just owning the stock, as least for 2011. …


Income-generating funds find favour

Financial Times

January 9, 2012

By Telis Demos

… The CBOE Dow Jones Industrial Average Buy-Write index, which tracks the strategy, returned 8 per cent last year. …


Buy-Write Is the Right Buy


By Steven M. Sears

Dec. 31, 2011

… In 2011, when the Standard & Poor’s 500 Index exhibited tremendous volatility, only to finish the year at roughly the same place that it began, the Chicago Board Options Exchange’s BuyWrite Index (BXM) rose 5.7%. …


Options for Nervous Investors

Wall Street Journal

Dec. 10, 2011

By Jack Hough

… Over 10 years through November, the BXM returned 4.2% a year, versus 2.9% for the S&P 500. Over 20 years, which counts the go-go 1990s, its lead is narrower: 8.4% versus 8.3%. During both periods its volatility was significantly lower than that of the S&P 500. …


Covered Calls Finish Strong In 2011

Seeking Alpha

By Bill Luby

January 4, 2012

… Note that PBP outperformed SPY by 7.7% during this six-month period, with considerably less volatility and also a less peak-to-trough drawdown…


Using the Buy-Write Strategy to Benchmark Your Portfolio, Smooth Returns

By Steve Smith

Dec 30, 2011 … But as the table below shows, 2011 was something of an outlier as the ^BXM provided 30 basis points over the ^PUT . My guess is that in 2011, as many companies returned to or increased their dividends, this accounted for the ^BXM outperformance. The largest drawdowns during 2011 were during late July to early August in which S&P declined 17%, ^BXM lost just 11% and the ^PUT declined 13% during the period.


Covered Call ETFs For A Volatile, Sideways Market

By Vince Martin

January 10, 2012 

… In 2011, the BXM finished up 5.7%, versus the essentially flat performance of the broader index. And as Barron’s noted last week, other variations of the strategy — writing cash-secured puts, or covered calls on different indices — performed even better. …



The BXM Index has had lower volatility and slightly higher returns than the S&P 500 Index over the past two decades. 

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