Summertime survey of ETF vol

Research evidence excerpt

Summertime survey of ETF vol

hasing a call/put is that investors will lose the entire premium paid.

Uncovered call writing: The risk of selling an uncovered call is unlimited and may result in losses significantly greater than the premium received.

Uncovered put writing: The risk of selling an uncovered put is significant and may result in losses significantly greater than the premium received.

Call or put vertical spread purchasing (same expiration month for both options): The basic risk of effecting a long spread transaction is limited to the

premium paid when the position is established.

Call or put vertical spread writing/writing calls or puts (usually referred to as uncovered writing, combinations or straddles; same expiration month for

both options): The basic risk of effecting a short spread transaction is limited to the difference between the strike prices less the amount received in

premiums.

Call or put calendar spread purchasing (different expiration months; short must expire prior to the long): The basic risk of effecting a long calendar

spread transaction is limited to the premium paid when the position is established.

Because of the importance of tax considerations to many options transactions, the investor considering options should consult with his/her tax advisor

as to how taxes affect the outcome of contemplated options transactions.

Supporting documents that form the basis of our recommendations are available on request.

The Options Clearing Corporation's report, "Characteristics and Risks of Standardized Options", is available at www.theocc.com/about/publications/

character-risks.jsp

Master limited partnerships (MLPs) are pass-through entities structured as publicly listed partnerships. For tax purposes, distributions to MLP unit