Stephen Crewe: Option premium as an alternative income source

Volatility risk premium access

clock • 6 min read

Option writing allows investors to maintain their desired asset allocation while delivering an enhanced level of income, writes Stephen Crewe, and so is a consideration for income-seekers in the current environment

UK interest rates may have risen for the first time in a decade last month and yet, for those seeking income, an increase of 0.25% is unlikely to have set pulses racing - particularly since it may be some time until we see another hike. In the meantime, balanced funds are still struggling to deliver enhanced levels of income without moving up the risk spectrum - but there is a solution to this dilemma: deriving income from option premia. The strategy of selling options provides an enhanced level of income and exposure to an additional source of return but, most importantly, it allows for...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

Advisers notice growing client demand for bespoke investments

Advisers notice growing client demand for bespoke investments

Want access to ETFs, investment trusts, equities, bonds and AIM shares

Isabel Baxter
clock 17 April 2025 • 2 min read
FCA outlines final CCI ruling timeline as it brings out second consultation

FCA outlines final CCI ruling timeline as it brings out second consultation

'Detailed engagement' to continue

Eve Maddock-Jones
clock 16 April 2025 • 3 min read
Talking with… Rathbones Asset Management's James Thomson

Talking with… Rathbones Asset Management's James Thomson

The series continues as Richard Romer-Lee chats to James Thomson

Richard Romer-Lee
clock 14 April 2025 • 4 min read