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Buy-Write Index Definition

Definition

The word buy-write index describes some standard that provides investors with insights to the operation of cell phone plans. Investors utilize buy-write plans to put in income to a investment decision ‘s yield whilst lowering volatility.

Explanation

A buy-write indicator was made to mimic the operation of a buy-write plan put on the portfolio of securities like the DJIA, S&P 500, or even Russell 2000. Additionally known as a call, a buy-write can be really a way in that the buyer holds a portfolio or stock of stocks, even while at exactly the exact same time attempting to sell call options on such securities.

The Chicago Board Options Exchange (CBOE) provides investors with different buy-write indices, which may be utilized by shareholders to benchmark the effectiveness with this plan. Ordinarily, a buy-write will under perform stocks if their rates are rising, and out perform stocks if their rates are decreasing.