Schroder Income Maximiser adopts covered call overlay to obtain BP yield

Schroders' Income Maximiser fund has used its call writing strategy to obtain high yields from BP at a time when other equity income funds were hit by the oil giant cancelling its dividend.

While last week’s decision by BP to scrap dividend payments until 2011 forced many equity income managers to re-evaluate their holdings, the Income Maximiser fund has been able to retain the low-valued stock by using its overlay strategy to achieve a yield. With the BP share price suffering severe swings in recent weeks due to the escalation of the Gulf of Mexico disaster, Income Maximiser manager Thomas See used this volatility to set high strike prices and yield premiums. On 3 June, when BP’s share price was 432p, See obtained a 1.4% yield premium on the oil giant in exchange for a ...