Eighty-one percent of institutional investors surveyed by Greenwich Associates said they were satisfied with the performance of their listed options investments vs. market benchmarks.
The vast majority of those considering starting or increasing a listed option allocation are money managers, with 48% of them making the move, according to the Greenwich report, "How Institutional Investors Use and Think About Listed Options."
Among pension plans and endowments, however, only 16% said they would start or add to their listed options investments.
Among the institutional investors that use listed options, 20% use covered calls, 24% protective puts, 22% short puts and 17% collars — buying an out-of-the-money put option while selling an out-of-the-money call option.
Also, 98% use index options, 57% single-stock options, 43% use ETF options, 36% use options on futures, and 17% use flexible exchange options.
Richard Johnson, vice president, market structure and technology, at Greenwich and the author of the report, wrote that institutional investors are using listed options to protect their portfolio following a long bull market, to increase income from investment holdings and to improve their overall risk-return profile. "For those investors already utilizing listed options, there is a high level of satisfaction with these strategies," he wrote.
The report was commissioned by the Options Industry Council.
Eighty institutional investors were surveyed between December and March — 50 corporate and public pension plans, 18 money managers and 12 endowments.