The Sapphire Star Covered Call strategies are based on the popular “buy-write” approach to investing in the equity markets. The buy-write trading strategy involves the simultaneous purchase of equity securities and the writing of call options on these same securities and the subsequent collection of the call premium income. The Sapphire Star strategies combine the innovative Sapphire Star Large Cap Core Tactical strategy with a buy-write option overlay. Because the U.S. markets are expansive, most stocks have monthly options, giving the strategies flexibility. The option selection process focuses on contracts that are “close-to-the-money” and seeks the highest amount of income possible (the target range is 0.10% - 1.00% per month). The expiration dates of the calls vary from 1 to 9 months for the “growth” portfolio and out to 9 months for the “income” portfolio. An objective of this strategy is to generate income (via the call premiums and dividends) and to limit the volatility of the portfolio. Volatility can be lowered due to the portfolio’s ability to hold higher levels of cash, up to 50%, when conditions warrant.

Universe: U.S. Listed Equities and ADRs

Market Cap Minimum: $10 B

Fundamental Factors:

  1. Trending Top Line Growth
  2. Long History of Paying Dividends
  3. Operational Efficiency and Improvement

Technical Criteria:

  1. Positive Return-to-Risk Characteristics
  2. Consistently Low Volatility
  3. Liquid Options Market