Investing in equities has historically offered one of the simplest methods of achieving a return above cash. At the same time equities are risky, offering no guaranteed fixed income as bonds or gilts do, and the least protection in the case of company default.
In an ideal world we would want to keep the long term returns that equities generate but remove or manage the risk associated with those returns. This section looks at various methods of using derivatives to better manage the types of returns you can achieve with equity investments.
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The Condor
The condor is an equity-based strategy that is designed to maximise returns during relatively calm market conditions.
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The Geared Call Spread
The geared call spread is designed to provide as high a return as possible in as short a time as possible with full downside protection.
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The Enhanced Call Spread
The enhanced call spread provides a higher return than the geared call spread but doesn’t provide full downside protection.
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