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False, options price risk and pension funds don't play in that arena. Way too illiquid.
by blazespin 10y ago
False, options price risk and pension funds don't play in that arena. Way too illiquid.
- tptacek 10y agoI don't understand this comment, which seems to suggest that pension funds, endowments, and mutual funds don't own Sony stock.
- blazespin 10y agoThere is not a 1 to 1 correlation between options and stock price. There is a risk volatility factor as well. Do some options trading and then come back and talk about this.
- qaq 10y agoThey can write covered calls
- blazespin 10y agoPension funds don't.
- qaq 10y agoThey do just a random quote on the subject : "While public pension programs have traditionally stayed away from using options strategies in their portfolios, that is beginning to change. This year, John Colville, Portfolio Manager, disclosed that he was successfully employing options on up to 66% on the equity portion of the City of Sacramento’s pension fund. We also learned that Tim Walsh, former Investment Director with New Jersey’s public pension system had similar success employing covered call options. Most recently we learned that CalSTRS intends to allocate to one or more managers a total of $150 million across both low volatility equity and covered call strategies. Upon evaluation of the performance of this initial allocation, CalSTRS may expand the program in terms of number of managers or capital invested."
- blazespin 10y agoWell, those are long term calls, I can see it being used for hedging (though yikes, I hope none of my retirement funds are doing that, talk about timing the market) Pension funds most absolutely do not speculate in options near expiry.
- jonknee 10y agoPerhaps not directly very often, but they certainly allocate money to funds that trade options.