Ask the advisor, whats the philosophy behind this? How does this align with the investment goals? Is the 25.63% cap on top of fees?Good morning,
My mother just received a suggestion from her advisor. Its called SPY cap and go trade. Its a bit confusing to me.
Term- 34.3 months
Underlying assets-SPY
Cap-capped at 25.63%
Downside before protection: 0%
Protection- 100%
Assumed lido advisor mgmt fee- 1% annually
maximum lido adviso mgmt fee-1.25 % annually
Her email says its called Cap and go and over the next 3 years she would have no loss exposure but can participate in up to 26% growth. Doesn't cost anything to implement and she can sell out of at any time. It comes with a chart attached that shows potential return based on SPY price .
Can someone explain this a bit better to me so that I can understand? How is there no loss exposure for 3 years? Why is returns capped at 26% growth? Couldn't she just put money in a taxable account that simulates SPY or S&P 500 and avoid the advisor fees? Thanks for your help everyone.
BTW - This is a simple collar, and the advisor fees of 1.25% for accomplishing this is huge!
One can do this at a cost of just 3 trades or just $1.00 in fees, and also get to keep dividends.
Also, this is somewhat, unintelligent trade.
Statistics: Posted by Invictus002 — Sat Feb 15, 2025 12:52 am — Replies 9 — Views 310
