Highly Appreciated Securities Program
powered by Winning Points Advisors, LLC
It’s a dream, really, to have stocks that have gone up so much that you don’t want to sell them because of the tax that will be due.
It’s a dream until you have that and understand that more and more of your portfolio is tied up in one stock and you are subject the ups and downs of one company, one industry and one dividend payout rate.
Enter the Highly Appreciated Securities Program, or HASP™ to help.
This program operates under the assumptions that we are not permitted to sell any of our clients’ shares.
We sell call options against your holding and use those proceeds to supplement your income or diversify your risk. The call options come in different forms:
1) We might sell call options against the securities that you actually own. If, for example, you own Exxon Mobil, we might sell Exxon Mobil calls to generate cash flow.
2) Additionally we might sell calls against the main stock index that Exxon Mobil is part of, like the S&P500™
3) Or perhaps those other indexes that your individual shares may play a role in. For example, an ETF that tracks your stock’s industry.
4) Lastly, if appropriate, and if the rise and fall of your shares can be correlated to the price of a commodity (like oil, gold, or natural gas) and if such a commodity has a liquid and highly rewarding ETF or index on which we can sell calls, we may look at that.
Using a combination of these available options it may be possible to generate income well in excess of
what might be available if we used the individual’s stock alone. This is because the options on the indexes and ETF’s might have a much bigger yield the option yields on your individual shares.
Then, taking the above and others items we may find that pertain to your individual shares, and using these as our available tools, we decide where we’ll get the “biggest bang for the buck,” meaning where can we bring in the most cash, while we maintain as much wiggle room as possible to handle the rise in value of the shares?
One very important point that we feel is different about this program than some call writers say, is that we shy away from high returns. If a stock’s calls are higher in return than its percentage of the index, it’s actually a sign to move toward the index and the lower return, rather than lean into selling more of these fat returns on the stock. You see, stocks get taken over; indexes don’t. The market is not as inefficient as one would read about in the newspapers, and the options pricing is a very sensitive way of noting the markets’ aspirations toward a single company.
The Big Objections that Most People Have to a Program Like This
Most investors are slow to write calls on their highly appreciated securities for several reasons: (Corporate insiders have other concerns as well; see our HASP2 Program)
1) They are concerned that their shares may get called away by an inattentive or incompetent manager.
2) They believe the reward (the premiums collected, less the costs required) is not worth the time and hassles of the program.
We solve these two issues easily. First, the concern that some stock may get sold by accident: That is easily solved by not giving us any of the highly appreciated shares (or keeping them in a separate account from where the options activity is taking place), so that it’s not possible to accidentally sell it should a call get exercised.
The second issue is the low yield on the options that many of these highly appreciated securities offer. Usually they have a dividend that is higher than the index’s yield, and so the options on these securities tend to be “cheap.” We believe that we can solve this low return concern by using the alternatives indexes to gather more option premiums, and by not charging an additional fee for the option writing. Therefore, we believe that we have a very attractive solution to the challenges that most people face in making an option writing decision.
We ask the client to transfer to us a sufficient dollar amount of assets to act as collateral for the option writing activities that we will undertake against their highly appreciated securities. Our fees to manage that collateral account compare favorably to any investment advisory firm, and the additional services are provided for no extra fee.
Would you like an illustration detailing what type of return might be available for your highly appreciated securities?
To request more information please send us an email and tell us which securities you would like a report on. We will be back to you shortly- it takes about 3 business days to complete your report.
Your report will include
An estimate of the additional yield we think we can add on to the conventional yield via the use of index options
An additional estimate of any additional yield we thing we can get from specialty ETF’s or other specialty securities
A detailed chart showing the exact option, their prices, and symbols, including the number of them, so you can track the trades
A calculation showing the amount of the account that will serve as the collateral and how we will invest it and hedge it at will to generate more income.