Enhanced Indexing Strategies: Utilizing Futures and Options

Annual returns of 18-20 percent are achievable with an innovative new leveraged indexing strategy. The author advocates a strategy that involves using LEAP call options or index futures essentially as a form of debt to leverage exposure to an index.  In the case of options, by rolling the options forward, the investor builds equity in the option. The author claims that while leveraged indexing has been rapidly growing in popularity, many of the ETFs currently available are unsuitable for the buy-and-hold investor and have somewhat limited upside potential because of the way the leverage ratio is maintained. Yates believes his approach provides a less-risky way to generate higher returns on borrowed capital.