About CSO
The Rampart Concentrated Stock Overlay (CSO) is designed to generate a new income stream from a client’s existing equity position(s). CSO enhances the income potential of concentrated positions by leveraging a combination of sophisticated modeling programs and professional options management strategies. The trade-off is that the investor must be willing to forego some potential for upside appreciation.
The ROMS-driven Concentrated Stock Overlay is based on three guiding principles:
- A call writing strategy can generate additional cash returns by monetizing the volatility of an underlying stock.
- Options positions are based on the number of shares in the underlying stock and the amount of appreciation potential.
- At any point, there is a single optimal call option to be written against a precise number of shares.
Rampart will provide a customized illustration for each specific stock or portfolio of stocks. The Illustration identifies the trade-off between risk and reward and is only an estimate of possible results from participating in the Concentrated Stock Overlay. There can be no assurance that actual cash flow will be the same as, or similar to, that depicted in the illustration.
The Concentrated Stock Overlay strategy can help increase the productivity or utilization of an investor’s concentrated equity position(s). Selling equity call options against the underlying position generates premium income in addition to any dividends received on that equity holding. An investor must be willing to forego, at least temporarily, potential upside appreciation beyond the Target Price in exchange for the benefits of added incremental income.
Concentrated Stock Overlay Factsheet