Systematic Options Strategy
A disciplined approach to wealth compounding through systematic put-writing on defensive equities, anchored by broad market index exposure.
Explore Our ApproachInvestment Philosophy
Cameron Capital employs a sophisticated yet transparent investment methodology predicated upon the systematic monetization of implied volatility premiums embedded within equity options. Our core thesis acknowledges that options markets consistently overprice future realized volatility—a well-documented phenomenon in academic literature known as the Volatility Risk Premium (VRP).
By constructing a portfolio that maintains full exposure to broad market indices while simultaneously writing cash-secured puts on carefully selected low-beta, defensive equities, we capture this structural inefficiency. This dual-mandate approach enables participation in secular equity market appreciation while generating supplemental income through premium collection.
Our target universe comprises fundamentally sound enterprises exhibiting defensive characteristics: stable cash flows, consistent dividend policies, sector resilience during economic contractions, and historically muted sensitivity to systematic market movements. These attributes create an asymmetric risk-reward profile particularly suited to put-writing strategies.
Core Strategy
Maintain 100% notional exposure to diversified index instruments—ETFs tracking the S&P 500, total market, and international developed markets. This foundation ensures participation in long-term equity risk premiums while providing liquidity and transparency.
Systematically sell cash-secured puts on low-beta equities exhibiting defensive characteristics. Target underlyings include utilities, consumer staples, healthcare, and telecommunications—sectors demonstrating historical resilience during market dislocations.
Reinvest collected option premiums into the core index allocation, creating a compounding mechanism. This recursive capital deployment accelerates wealth accumulation while maintaining portfolio equilibrium and risk parameters.
Execution Methodology
Candidates must exhibit trailing 252-day beta coefficients below 0.85 relative to the S&P 500. Additional screens include minimum market capitalization thresholds, investment-grade credit ratings, consistent free cash flow generation, and average daily options volume exceeding 1,000 contracts to ensure adequate liquidity and competitive bid-ask spreads.
Puts are written at delta levels between -0.20 and -0.30, corresponding to approximately 15-20% out-of-the-money strikes. Expiration cycles target 30-45 days to expiration (DTE), optimizing theta decay characteristics while maintaining manageable gamma exposure as contracts approach maturity.
Each individual put position is sized such that the cash-secured notional value represents no more than 5% of total portfolio equity. Aggregate short put exposure is capped at 40% of portfolio value, ensuring sufficient capital reserves to meet potential assignment obligations without forced liquidation of core index holdings.
In the event of put assignment, acquired shares are evaluated against fundamental fair value estimates. Positions trading at discounts exceeding 15% to intrinsic value are retained and covered calls are layered to generate additional income. Shares trading near fair value are systematically liquidated and capital is redeployed to the index core.
During elevated VIX environments (>25), put-writing activity is strategically increased to capitalize on inflated premiums. Conversely, in compressed volatility regimes (VIX <15), position sizes are reduced and selectivity heightened, preserving capital for more opportune market conditions.
Inquiries regarding our investment approach, partnership opportunities, or general correspondence are welcomed.
contact@cameroncapital.com