Advanced trading strats

Convergex Launches a New Buy-Write Algorithm

The solution provided by the agency focused broker allows traders to implement their buy-write trading strategies electronically

One of the big agency-focused global brokers, Convergex, has unveiled a new product developed by the company for its clients. The firm, which actively delivers trading-related services, launched its new Buy-Write Algorithm.

The new solution uses two proprietary algorithms already developed by the company – the advanced VWAP equity algorithm and the Pulse options algorithm. The product allows clients to employ electronically buy-write trading strategies.

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The buy-write trading strategy consists of writing call options on a certain position which the trader has on the market

A buy-write trading strategy involves the writing of call options on a certain position which the trader has already taken on the market. The idea behind the strategy is to gain from option premiums.

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The downside in this strategy is limited by the fact that the options position is technically covered by the position which the trader already has on the market.

Combining the expertise in building alrorithms for trading equities with the options business of Convergex, the algorithm aims to buy equity positions and sell call options on the same stock simultaneously. Convergex’s clients can therefore hedge their equities exposures and also pocket some additional income from options premiums with a limited downside.

Commenting on the announcement, the managing director and head of electronic execution of Convergex, Oliver Sung, said, “Our diverse client base is always looking for new ways to extract more yield from the marketplace.”

“This buy-write algorithm provides a powerful new way for our clients to employ options in their investment strategy,” he added.

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