Enhanced Indexing Strategies: Utilizing Futures and Options to Achieve Higher Performance (Wiley Trading) [Hardcover]

Tristan Yates (Author)

Book Description

Publication Date: November 3, 2008 | Series: Wiley Trading (Book 378)

Leveraged index investments, including index futures, options, and ETFs, are one of the fastest growing products in finance, as both retail and institutional investors are attracted to their long-term returns and capital efficiency. With Enhanced Indexing Strategies, author Tristan Yates reveals how you can create and build high-performance indexing strategies using derivatives that can potentially generate much higher returns than conventional index investing. In addition, Enhanced Indexing Strategies introduces six innovative long-term indexing strategies using futures and options, each with its own advantages and applications.

Editorial Reviews

From the Inside Flap

Index funds are among the highest performing and most reliable investments available in the marketplace. Over the past several years, literally hundreds of index-related products have been introduced to the marketplace, most designed to provide investors with the capability to mix and match different funds in order to build custom portfolios. At the same time, leveraged investment products for the retail investor—which use borrowed capital to increase the returns within the structure of a passive investment strategy—are also one of the fastest growing products in the financial world. In Enhanced Indexing Strategies, Tristan Yates shows how to successfully combine these products using leveraged indexing to deliver better risk-adjusted returns than conventional approaches.

The idea behind leveraged investing is simple: if long-term investment returns are predictable, then even higher returns can be generated by borrowing and investing the capital over the long term in an index. Using derivatives such as futures and options, Yates reveals it is possible to not only borrow money to invest at a low rate, but also to implement hedging strategies that help reduce the risk of catastrophic losses.

Unlike other books on options trading that tell how to profit from short-term market movements, Enhanced Indexing Strategies uses options positions to capture long-term pricing trends. Using long calls and call spreads, hedging strategies, and LEAP call options—which have been hailed as an industry innovation due to their ability to maintain leverage while managing risk—Yates shows how to implement specific long-term strategies that can capture appreciation in volatile conditions across many years.

In addition to providing six different innovative long-term indexing strategies using futures and options, Yates also offers important advice on managing a leveraged investing portfolio. He covers each critical aspect of portfolio management: selecting indexes and strategies and determining the level of exposure, calculating the expected returns and the possible range of returns, and monitoring the portfolio to ensure that it is performing in accordance to projections. Yates's final piece of advice to investors is simple: get started. Every day you're not invested in an index is a missed opportunity for profits.

From the Back Cover

Praise for Enhanced Indexing Strategies

"This is the first book on index strategies that speaks to options positions that take advantage of long-term appreciation in all types of market conditions. Yates knows his stuff and gives advice in an easy-to-understand manner that any investor can understand. This book belongs on your book shelf."
—MARK WHISTLER, Author and Senior Market Strategist for TradingMarkets.com

How to use futures and options on index-linked securities to earn higher portfolio returns

Leveraged index investments, including index futures, options, and ETFs, are one of the fastest growing products in finance, as both retail and institutional investors are attracted to their long-term returns and capital efficiency.

In Enhanced Indexing Strategies, Tristan Yates reveals how you can create and build high-performance indexing strategies using derivatives that can potentially generate much higher returns than conventional index investing. He presents important industry research on indexed investing, leveraged portfolio management, and rapid reinvestment, detailing the rewards and risks of multiple options positions in clear and concise writing that links concept to practice.

Focusing primarily on long calls and call spreads, LEAP options, and hedging strategies, the author introduces six innovative long-term indexing techniques using futures and options, each with its own advantages and applications, that can capture appreciation in volatile conditions across many years. And he includes all-important advice on managing your leveraged investment portfolio: setting objectives, carrying out associated tasks, and measuring results.

See all Editorial Reviews

Product Details

• Hardcover: 286 pages
• Publisher: Wiley; 1 edition (November 3, 2008)
• Language: English
• ISBN-10: 0470259256
• ISBN-13: 978-0470259252
• Product Dimensions: 9 x 6.2 x 1.2 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (9 customer reviews)
• Amazon Best Sellers Rank: #1,313,161 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

6 of 7 people found the following review helpful:

2.0 out of 5 stars 2007 thinking released in 2009, November 26, 2009

By 

R. McClendon - See all my reviews
(REAL NAME)   

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This review is from: Enhanced Indexing Strategies: Utilizing Futures and Options to Achieve Higher Performance (Wiley Trading) (Hardcover)

The topic of the book (how to lever an index) was exactly what I was looking for, but despite being released in 2009, the book fails to even mention anything that has transpired over the last 2 years. All of the data ends in 2007, and the author routinely points out things like a 30% decline in the index is very rare. I understand this was probably written several years ago, but it's strange that every strategy he proposes (including his risk management techniques) would have resulted in catastrophic failure (losses >=100%) over the last 24 months. The author also relies heavily on backtesting and seems to lack a good grasp of fundamental investment concepts.

6 of 7 people found the following review helpful:

5.0 out of 5 stars A Unique Look at Alternative Investing Strategies, December 8, 2008

By 

Marshall Glickman "Author of Beyond the Breat... (Vermont, USA) - See all my reviews
(REAL NAME)   

This review is from: Enhanced Indexing Strategies: Utilizing Futures and Options to Achieve Higher Performance (Wiley Trading) (Hardcover)

I came across Tristan Yates' writing and research from the website Seeking Alpha. Interested in his careful and clear explanation of why leveraged index ETFs don't deliver their expected 2x returns over time, I visited his website to read more of his work. There I discovered he'd recently published a book looking at well, enhanced indexing strategies and also using options--especially LEAPs--for better returns. I've always suspected there were "structural" opportunities with LEAPs, but don't have the knowledge to estimate returns. So I was eager to get a copy of Yates' book.

Although Enhanced Indexing Strategies isn't exactly what I expected, it is a very helpful resource. Yates is meticulous in his research and stats, showing how various combinations of options and alternative approaches to index investing will perform in a variety of conditions. I shudder to imagine the amount of number-crunching hours that went into the calculations. Yates answers questions like a) what kind of returns can one expect if they put the bulk of their assets in treasuries and buy LEAPs with the balance b)What option writing and buying strategies look the most promising-not just at this moment, but over the course of years and different market conditions. And c) how to use leverage in an index portfolio for maximum benefit. It easy to follow, as Yates is a clear writer. Still, this is not a book for beginners. I'd say intermediate to advanced. Happily, there isn't any intimidating math.

So what I was expecting? I was thinking the book would be a bit more definitive in telling you what to do. In retrospect this was naive as Yates can only lay out how strategies have performed, not tell you which ones to choose, given that depends on your risk profile and tolerance. Overall definitely recommended [if I had more control would give it 4.5 stars], as Yates looks and carefully quantities investing ideas few publish about in detail.

2 of 3 people found the following review helpful:

5.0 out of 5 stars Best Options "Investing" (vs "Trading") Book Ever, September 20, 2009

By 

Pantologist "Pantologist" (Key Biscayne, FL) - See all my reviews

Amazon Verified Purchase

This review is from: Enhanced Indexing Strategies: Utilizing Futures and Options to Achieve Higher Performance (Wiley Trading) (Hardcover)

Practically all options books focus on in and out tactical trading; the type of trades that require you to stare at charts all day and not have a life. This book is really a handbook for institutional money managers and hedge fund managers. But its very relavent to the smart individual investor who wants to maximize portfolio returns with low levels of risk, and MOST importantly, to do so in least amount of time. Learn how they manage portfolios, hedge against downside risk, and generate cashflow thru theta (time) decay. The author provides a comprehensive review on how to hedge against the use of 5x-20x leverage to generate market beating returns with lower risk.

One gaines the most benefit by reading the books twice to absorb the details. Numerous "Investing" options strategies includes, vertical spreads, calendars, diaganols, portfolio Delta management, and DITM (deep in the money puts and calls). A MUST READ for the "Passive Income" investor. There is no other book at the Planet that addresses how to use options as an "investing" vs a "screen stare", "trading" tool. I highly recommend this book as its the best investing book I've ever read, and I've read over 100.