As a covered call manager we typically have two objectives: an income objective and a total return objective. Our income objective for an income-oriented client is to create 1 to 1.5 percent of option premium income per month based on the average portfolio value during a given year. Our total return objective is to maximize return and minimize risk in whatever capital markets environment presents. Below is an example of effective portfolio yield from an actual portfolio with an average income objective for the full year 2011. We break out the average effective yield on equity because equity produces all of the option premium and dividend income.
NEXT Total Return Objective