Market Volatility, Explained, at Long Island FPA Meeting

Sheaff Brock | Registered Investment Advisory Firm in Indianapolis, Indiana

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Sheaff Brock Investment Advisors, LLC

Nov 29, 2018, 12:47 ET

INDIANAPOLIS, Nov. 29, 2018 /PRNewswire/ -- Sheaff Brock Director and National Sales Manager Jim Murphy, CFP,® CAIA, and Paul Meinville, Vice President, Investments, helped differentiate historical (actual) volatility from implied volatility for attendees of the Long Island Financial Planning Association (FPA) meeting in Q4 of 2018. Sheaff Brock Institutional Group's presentation, Understanding Volatility and How to Manage It, focused on helping financial planners and investment advisors understand the benefits and risks of option strategies. Offering insights into market volatility may help planners and their clients utilize it as an opportunity for diversification and income.

Murphy explained impact of the Volatility Index (VIX) as an attempt to measure implied volatility of the S&P 500 stock index as priced with S&P 500 options. VIX creates a synthetic option expiring in 30 days and serves as an estimate of future prices.

He defined how VIX assesses volatility—by looking into the future, measuring the future "expected" volatility (not recently-observed volatility)—and demonstrated how VIX is measured and applied.

Sheaff Brock recommends that financial planners help their clients manage volatility by:

Knowing themselves as investors—risk tolerance, timeframe, objectives and goals
Focusing on diversification—strategically allocating assets, rebalancing, and not attempting to time the market
Understanding specific strategies to meet goals—portfolio/position hedge and opportunities for income generation, specifically options premiums

Presenting options as investment strategies for incremental income, Murphy closed with an analysis of the pricing of options and a review of put selling and credit spreads, as well as covered calls in relation to put selling. FPA attendees were eligible for continuing education (CE) credit for the meeting.

About Sheaff Brock Investment Advisors, LLC:
Sheaff Brock is an SEC-registered, independent investment firm focusing on innovative investment strategies that strive to enhance the portfolios of both growth- and income-oriented investors. The firm manages $1.04 billion in assets nationwide as of 12/31/2017. Sheaff Brock Institutional Group is a division of Sheaff Brock partnering with RIAs to provide strategic money management for their clients. Visit sheaffbrock.com or sheaffbrockinstitutional.com.

About The Financial Planning Association (FPA)
The Financial Planning Association is the principal professional organization for Certified Financial Planner™ (CFP^®) professionals, educators, financial services providers and students who seek advancement in their profession. The primary aim of FPA is to elevate the profession that transforms lives through the power of financial planning.

SOURCE Sheaff Brock Investment Advisors, LLC