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 5 years, implied volatility (blue) 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.
RS Low Beta Opportunity Fund was created to use options “correctly” by systematically selling them to consistently generate income, while waiting for a lower entry point into the market.