S&P/ASX Buy-Write Index™

The S&P/ASX Buy-Write Index (XBW) replicates the performance of a well known option trading strategy where the investor holds a long position in a security and then writes (or sells) call options against the long position. The short call position earns option premium for the investor however the short call also limits the potential profit from the long security position.

In the case of the XBW, the underlying security is the S&P/ASX 200 Accumulation Index over which a S&P/ASX 200 Index call option is sold each quarter. Once an option series has been selected and a short option position established, the option position is held to expiry. At the expiry of the current option a new option to be sold is selected where the new option is the next quarterly option to expire and the next out of the money strike.

For more information on the XBW please view the Buy Write Strategy fact sheet (PDF 88KB)

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Why use options in equity portfolio management?

Options are a tool that should be in every equity fund manager's toolbox.  Active managers can use options to:
  • generate extra returns
  • reduce risk
  • reduce transactions costs
  • reduce market impact costs of acquiring stock

> options usage in equity portfolio management

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"We have used exchange traded options for many years as part of managing the risk of our domestic equity portfolios."

- John Gethin-Jones, General Manager, Global Equities, Queensland Investment Corporation

Buy-Write Examples