Greetings!
This months newsletter focuses on enhancing income and return on portfolios that are concentrated with one or a few stocks. Many folks we have met have been told time and again to diversify away from the stock. Although this could be sound advice depending upon the client situation, many people do not want to part with their stock, period! Most sit and hope for the value of their stock to increase over time; many with false expectations of realizing the same rapid growth that made the stock a concentrated part of their portfolio in the first place. At Volt, we offer a solution that strives to enhance income and return within a clients portfolio without having to sell the stock position. We hope the information in this letter is useful and please contact us with any questions.
Thanks,
Paul
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| Managing Large Stock Positions? Strategies that can increase return without having to sell the stock
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 When it comes to managing large stock positions, often the owners have no "management" strategy in place other than a "wait and see" what happens approach. Many people who have large positions hold an emotional bond to the stock as it was the gateway to their wealth. Others have inherited the stock position from previous generations and view it as the decedents legacy. Whatever the situation, when interviewed, many of these investors are eager and open to further "monetizing" the stock. With one stipulation; having no desire to sell the stock.
San Diego/Seattle based money manager, Volt Wealth Management, provides a customized approach to helping their clients enhance return on concentrated stock positions and general portfolios investors do not wish to sell. Griffin Meyers, COO of Volt, says, "Over the years we have worked with many clients that do not wish to sell their concentrated stock positions. Trying to get them to sell and diversify is an impossible task even when explaining the risks involved in having the majority of their wealth in one or a few stocks. What we found is that these clients still had a need to increase the return on the position as the glory days of growth for the particular stock they hold, in many cases, are behind them."
Griffin and Volt manage a program they call the Portfolio Overlay Strategy. They administer disciplined, mechanical options strategies using the clients portfolio position(s) as the foundation to the strategy. "Our goal is to use high probability strategies within strict risk parameters to generate additional income and return on our clients portfolios", Meyers says. The strategy is based off the notion that most equity options expire "out-of-the-money", meaning that the seller of that option holds the higher probability of success. The strategy goes beyond the typical "covered call" strategies that most are familiar with. Since it is a customized approach to each client situation, the Volt team works with each client to review different trading strategies and the risks involved with them.
Many investors have misconceptions on investing in options. Everyone has known someone who unsuccessfully "dabbled" with them. When used correctly, options can be a powerful tool within an overall investment plan and worth exploring to see if it would make sense as an addition to your portfolio management strategy. As with any investment, understanding the risks involved is a critical component prior to investing.
This document is not intended as an offer or solicitation. Investors should consult their own attorneys and tax advisors about the legal and tax issues concerning options transactions.
Options are subject to complex risks and trading is not suitable for all investors. For more information on the risks of trading option, a copy of the Characteristics and Risks of Standardized Options may be requested.
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Volt Wealth Management
