Options Tradiing - TFS ToPS

TFS ToPS is an exclusive additional service for Discretionary Managed Portfolio and Advisory Managed Portfolio clients and is suitable for experienced clients who are prepared to accept a higher degree of risk, coupled with the potential to enhance returns through derivatives.

Our client executive will operate TFS ToPS alongside the other portfolios. The service is based upon the writing of call options against equities held within a portfolio. The type of options utilised are known as Traded Options. In return for writing a call option the client will be paid a sum of money, referred to as ‘premium’ through the option market.

The writer of a call option has the obligation to sell the underlying investment at a fixed price up to a predetermined future date. The fixed price is referred to as the ‘exercise’ or ‘strike’ price and the predetermined future date is known as the ‘expiry date’.

In writing call options the obligation to actually sell the underlying investment is not guaranteed, but is initiated by the investor who paid the ‘premium’. This investor is the ‘holder’. It is at the ‘holders’ total discretion whether or not they insist on the selling to them the underlying investment.

One of the main risks in writing call options is that the price of the underlying investment in the market moves to a level that exceeds that of the ‘exercise’ price, leading to the obligation to sell the investment at the lower predetermined price, which in turn may give rise to a chargeable capital gain on the underlying investment. This could occur for a variety of reasons, such as a takeover.

If you are interested in this additional service which can produce enhanced returns on ‘blue chip’ portfolios, particularly in static or falling equity markets, then please contact marketing on 0208 133 2976 or email us by following the link click here.

 

 

 

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