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Financial Futures Investments

In: Business and Management

Submitted By Godsmack21
Words 1061
Pages 5
FIN-567: Options and Financial Futures Markets

Final Project


Jacob C. Harris

19 Dec 2015

The objective of this project is to develop an investing strategy for a portfolio that consists of $500,000 of stock from ten different companies, $500,000 worth of US Treasury notes ranging from two to five years in maturity, and another $500,000 in money markets. The money market investment is considered safe and will provide a return at the risk-free rate. The market outlook for the next 18 months indicates a flat to slight downturn prediction. Given this predication, I developed a strategy of using various call and put options on a few of the stock assets in the portfolio in order to provide some income in a flat to down market. I will write covered calls to generate income and protective puts in order to limit the amount of losses in case of a dramatic drop in the market. The US Treasury notes portion of the portfolio is a ladder strategy consisting of various maturity dates to generate a steady stream of income from coupon payments over the next five years. The money market assets will also provide a steady stream of income at the risk-free rate equal to the rate on three-month US Treasury bills. My hedging strategy is to be conservative in a flat to down market that is predicted for the next 18 months. The portfolio of stocks consists of companies in various sectors of industry in order to diversify the unsystematic risk. I have two conglomerates, General Electric and 3M in the portfolio. One telecommunications company, AT&T, is included in the portfolio. In the banking sector, I bought stock in Bank of America. I purchased stock in Cisco Systems, which is a computer networking company. In the retail sector, I chose to invest in Home Depot. I invested in two pharmaceutical companies, Johnson & Johnson and Pfizer. The last...

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