Dec. 28, 2016

Options Backtesting Results

Historical average return: +$578.45 (backtested over 7.9 years)
Historical success probability: 93.0%

Summary

Rising interest rates are creating increased uncertainty around real estate prices and prospects for growth in the housing sector. Increased implied volatilities in homebuilder ETF XHB options creates interesting opportunities for put option sellers looking to collect more attractive premiums than broader market ETFs are currently providing. Our options backtesting suggests that the market is overpricing the uncertainty in homebuilders compared to what history would suggest.

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