BuyWrite strategy. What is this?

Among the major ETF ¹ popular today at the Milan ¨ c'a also Lyxor ETF DJ Euro Stoxx 50 BuyWrite. This particular ETF, Â is a effective structure, which consists of a Fund entitled French, managed by Lyxor Int AM, which has € ™ aim to replicate the performance of â € ™ index benchmark (DJ Euro Stoxx 50 BuyWrite) thanks to a "passive management" and to a particular mechanism of operation referred to as â € œcreation / € redemption in kind. Lâ € ™ issuer reserves the right to distribute all or part of the proceeds and / or capitalization. The benchmark index and 'the DJ Euro Stoxx 50 BuyWrite, an index strategy consists of a position œlungaâ € € â € ™ on the index Dow Jones. Euro Stoxx 50 Total return and from a position â € œcortaâ € € ™ on a call option out of the money of 5% on the same index which is renewed (â € œroll over €) per month. In practice against a long position on the index is sold a call option with a strike price above the market value, pocketing a prize. A strategy of this kind makes sense, of course, only if the market remains stable. In this way you can outperform the index (which in fact remains stable), adding the premium received to the calculation of performance. If the sale of call options is made for an amount lower than that of the index in a downgrade option lapses without being exercised, then collects the prize but it suffers the same almost the entire decline of 'index. Wind par'essere good, but the uncertainties are many.

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