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OVERVIEW
ROMS represents the evolution of a concept more than 20 years in development. It employs exchange traded equity call options to create a "cash pool" by writing a predefined* number of option contracts against each discrete position. This cash pool can be used to provide or enhance distributions, purchase puts (insurance), add to return, reduce volatility or reallocate assets (sell stock). Once initial positions are set, ROMS manages the discipline by recommending an increase in the level of hedge as a stock appreciates and conversely a decrease in that hedge as a stock declines in price.
Historically, the greatest impediment in utilizing equity call options was finding the talent and the time. Those requirements were necessary to properly evaluate the options on large groups of stocks and manage positions as each stock advanced or declined or time passed. Now, with the capabilities of state-of-the-art, high speed computers and networks, combined with advanced delivery media such as the Internet, a complete analytical capability can be made available to professional investors as an attractive, cost effective package.
*The number of initial contracts written and resulting cash generated is determined by establishing a price (Target Price) at which all shares of a particular stock are fully written. |
INVESTMENT OBJECTIVES
ROMS Target assists the client and portfolio manager in setting "target prices" or price points on individual stocks providing for customized risk/reward profiles. Each day, ROMS evaluates the equity/option portfolio to ensure that the "best option" in the appropriate quantity is always being held.
ROMS is capable of managing positions on over 2,600 listed, optionable stocks by evaluating more than 300,000 listed options.
Only those positions that need to be adjusted as a result of critical mathematical evaluation are offered to the manager via
ROMS Trade. This daily, systematic evaluation enables the management of a multitude of positions on an exception basis.
ROMS was developed and is fully supported by Rampart Investment Management Company, having more than 20 years experience utilizing this system. Usage consulting, "target price" setting and strategic and tactical oversight is provided by Rampart as an integral part of the service.
ROMS enforces a systematic buy low, sell high discipline. |
FEATURES AND BENEFITS
- Make a large concentrated stock holding or portfolio more productive by earning "dividends" on your shares even if a stock does not currently pay dividends
- Produce significant cash flow up to your Target Price
- Reduce stock’s downside risk by the amount of option premium taken in
- Over-writing is a disciplined way to liquidate stock at a pre-specified target price
- Over-writing is easy to implement from a back office perspective. Existing shares serve as collateral for the sale of call options; this is a highly conservative strategy.
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