NYSE announces launch of the NYSE Enhanced Buy-Write index

By Tali Rackner

Norfolk, Va., Oct. 15 – The New York Stock Exchange announced the launch of the NYSE Enhanced Buy-Write index, an index that aims to provide a smart beta solution for investors wishing to access the buy-write strategy, according to a press release.

Buy-write strategies involve buying stocks and writing call options against those stock positions. The objective is to enable an investor to earn extra income to hedge against downside risk, while forgoing some upside potential.

The index aims to improve on many of the existing buy-write index benchmarks by introducing new features.

Specifically, the index invests in the most liquid exchange-traded fund in the United States, SPY, and writes SPY weekly options rather than monthly options. The exchange said weekly options have grown to be a very liquid and active market since the original buy-write benchmarks were introduced. The use of weekly options allows investors to maximize the amount of premium they receive and enables them to write calls at higher strikes each subsequent week during rising markets.

In addition, the index uses a well-known and simple market barometer, the crossing of the 50-day and 200-day moving averages, to decide whether to allocate to an in-the-money or out-of-the-money option at a strike equal to 98% or 102% of the current SPY price.

“The NYSE is proud to work with T3 Index to introduce this new buy-write index strategy,” Steve Crutchfield, NYSE head of options, ETPs and bonds, said in the release.

“The well-constructed methodology of this new index enables investors to improve both the risk and return of their buy-write investments over competing benchmarks, and further shows the New York Stock Exchange to be at the forefront of new strategies in the indexing and options space.”

Developed in association with T3 Index, the index is published on the NYSE Global Index Feed under the symbol NYBW.

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