Name: Should I Hedge My Portfolio with Options Strategies?
Uploaded: 2026-01-21T18:48:53+00:00
Duration: 2351 s

Speakers

Brian Jacobs — Portfolio Manager, Aptus

Ben Carlson — Director of Institutional Asset Management, Ritholtz Wealth Management

Duncan Hill — Co-Host, The Compound

Summary

Ben Carlson and Duncan Hill host an Ask The Compound episode on options-based ETFs and portfolio hedging, featuring Brian Jacobs of Aptus. They explain collar strategies, buffered ETFs, and defined-risk fixed income products, including ACIO and DRSK. Later they discuss the cyclicality of international versus US stock leadership, financial independence, and the financial trade-offs of having a spouse stay home.

Brian Jacobs explains how puts, calls, collars, and covered calls are packaged inside ETFs.
Aptus's ACIO uses an active collar to limit early drawdowns while capping upside.
DRSK combines investment-grade bonds with equity puts and calls as a fixed income replacement.
Buffered ETFs offer defined downside protection but historically have delivered roughly 60-80% of equity returns depending on cap levels.
Lower-fee buffered ETFs may allow higher caps and better expected returns.
Ben Carlson says international diversification still makes sense, though US leadership may persist and cycles are unpredictable.
The show also covers retirement purpose, work after financial independence, and stay-at-home spouse trade-offs.

Ideas

Brian Jacobs Portfolio Manager, Aptus 5:41

Active collar ETF caps upside, limits downside

ACIO is an actively managed collar strategy: it owns equities, buys puts to protect against roughly the first 5% of a drawdown, and sells calls to pay for that protection, accepting a cap on upside. Because it is active, it can reset the put strike and move the cap higher as markets rise and roll puts back into equities after drawdowns, aiming to remove tail risk and be more tax-efficient in an ETF wrapper than implementing options directly.

Brian Jacobs Portfolio Manager, Aptus 9:56

Bond ETF adds equity options overlay

DRSK is a fixed-income replacement: it holds core investment-grade corporate bond ladders and uses part of the bond income to buy equity call options for upside and put options for downside protection. It can underperform traditional bonds if markets are flat, but the options are intended to increase return potential while preserving fixed income's diversification and shock-absorbing role, with tax-efficient ETF treatment.

Brian Jacobs Portfolio Manager, Aptus 14:49

Low-cost buffered ETFs improve capped returns

Buffered ETFs provide defined downside protection, often against the first 15% of losses, in exchange for capped upside; less protection and lower volatility mean less return, and historical caps around 10%-13% left investors with roughly 60%-80% of equity-market returns. Aptus believes many buffer ETFs are overpriced at 75-100 bps, so its 25 bps buffer suite redirects fee savings into higher caps, improving expected returns; these products fit retirees or nervous investors who might otherwise sell, not those who can hold a broad index through drawdowns.

Ben Carlson Director of Institutional Asset Management, Ritholtz Wealth Management 22:21

International diversification still makes sense

International developed and emerging-market stocks outperformed US stocks in 2025 for the first time since 2017, and rolling 10-year relative returns show leadership is cyclical rather than permanent. US stocks have dominated for a decade by roughly 170%, but US equities are 65% of world market cap while the US is only 4% of population and 25% of GDP, and fiscal loosening in Germany and rate normalization in Japan could support non-US markets. While it is unclear whether this is a new cycle, international diversification still makes sense.

Should I Hedge My Portfolio with Options Strategies?

Summary

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