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

IFAs look to boost clients' private markets exposure

IFAs look to boost clients' private markets exposure

Expect increase in stock market volatility

Jen Frost
clock 02 July 2025 • 2 min read
Winds of change: Private markets access for retail investors

Winds of change: Private markets access for retail investors

Investing in LTAFs, accessibility aside, needs careful consideration

Dorian Hughes
clock 02 July 2025 • 5 min read
Stock pickers call for caution over rapid return to US equities

Stock pickers call for caution over rapid return to US equities

Quilter's WealthSelect boosts fixed income and reduces equity exposure

Linus Uhlig
clock 01 July 2025 • 1 min read