NYSE launches Australia developed index

T3 Index chief executive Simon Ho


By Wouter Klijn

Australian investment company Triple 3 has signed a deal with the New York Stock Exchange (NYSE) for the launch of a new smart beta index, which gives investors access to buy-write strategies.

The index was developed by Triple 3’s index division T3 Index, which specialises in volatility and options benchmarking.

"The New York Stock Exchange is at the forefront of new strategies in the indexing and options space,” T3 Index chief executive Simon Ho said.

“Partnering with the New York Stock Exchange is an exciting opportunity for T3 in the development of smart beta and volatility-based solutions,” he said.

Buy-write strategies involve buying stocks and writing call options against those stock positions.

The objective is to enable an investor to earn extra income to hedge against downside risk, while forgoing some upside potential.

The new index aims to improve on many of the existing buy-write index benchmarks by introducing new features.

The index invests in the most liquid exchange traded fund (ETF) in the US: the SPDR S&P 500 (SPY), and writes weekly options rather than monthly options.

Since the original buy-write benchmarks were introduced in the last decade, weekly options have grown to be a very liquid and active market.

By investing in weekly options, investors can maximise the amount of premium they receive, and, enable them to write calls at higher strikes each subsequent week during rising markets.

Also by utilising a simple market barometer, the crossing of the 50-day and 200-day moving averages, the index decides to either allocate to an in-the-money or out-of-the-money option at a strike equal to 98 per cent or 102 per cent of the current SPY price.

“The NYSE is proud to work with T3 Index to introduce this new buy-write index strategy,” NYSE head of options, ETPs, and bonds Steve Crutchfield said.

“The well-constructed methodology of this new index enables investors to improve both the risk and return of their buy-write investments over competing benchmarks, and further shows the New York Stock Exchange to be at the forefront of new strategies in the indexing and options space,” he said.

The NYSE Enhanced Buy-Write Index is published on the NYSE Global Index Feed (GIF) under the symbol ‘NYBW.’

T3 Index was established in 2009 by chief executive Simon Ho and the company is dedicated to developing investible indices that track options and volatility related strategies.

T3 Index is a member of the Triple3 Partners group, which is represented in Australia by Grant Samuel Funds Management.

Ho won the Lonsec Innovation Award earlier this week at the SuperRatings and Lonsec Awards 2015 for its Triple 3 Volatility Advantage Fund.

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