Why RS Low Beta Opportunity Fund Exists

Most investors purchase options (either to leverage upside or hedge downside) because the risk is limited to premium spent, but these options are typically overpriced because actual volatility is typically less than implied volatility.

Over the past 10 years, implied volatility (white) is greater than actual volatility (orange) the majority of the time. This spread results from a variety of factors, most notably the increased demand for protection on the S&P 500. After a 3-month period (early COVID) in 2020 where historical volatility was consistently greater than implied volatility, once this reverted back, the trend where implied remains greater than historical volatility began again, and we expect this to continue.

RS Low Beta Opportunity Fund was created to use options “correctly” by systematically selling them to consistently generate income in all market environments.