Collar Strategies and Concentrated Stock Positions - Video Transcript – Filmed: March 4, 2014 Important disclosures provided on page 2.                                                                                                                                                                                1        

     

Collar Strategies and Concentrated Stock Positions Video Transcript

An interview with:

Bill Merz, CFA Alternative Investments Strategist    What strategies may be helpful when dealing with concentrated stock positions? Many investors face the unique challenge of dealing with concentrated stock positions in their portfolio, which creates risks because of the lack of diversification that results. We have a number of strategies to help reduce these risks. In many cases, simply selling the shares may result in a large tax liability. One choice clients have is a collar strategy, which uses put options and call options to adjust the risk and return profile of the holding. However, collars involve a tradeoff since not only do they limit potential losses but also potential gains, and tax implications should always be considered. What might you recommend for dealing with this and what are the risks? An additional benefit of collars arises when clients are in need of liquidity. The terms of a loan that uses a collared position as collateral can often be more attractive than other forms of borrowing. Again, these strategies involve risks, particularly when using leverage. We have the expertise to deliver creative solutions to help manage risk. Clients should speak with their Wealth Management Advisor to discuss these opportunities in more detail.  

Collar Strategies and Concentrated Stock Positions - Video Transcript – Filmed: March 4, 2014 Important disclosures provided on page 2.                                                                                                                                                                                2        

IMPORTANT DISCLOSURES

This information represents the opinion of U.S. Bank and does not constitute investment advice and is issued without regard to specific investment objectives or the financial situation of any particular individual. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that the forecasts will come to pass. These views were presented on March 4, 2014 and are subject to change at any time based upon market or other conditions. The information presented is for discussion purposes only and is not intended to serve as a recommendation or solicitation for the purchase or sale of any type of security. U.S. Bank and its representatives do not provide tax or legal advice. Each individual's tax and financial situation is unique. Individuals should consult their tax and/or legal advisor for advice and information concerning their particular situation.

Past performance is not a guarantee of future results. Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. Alternative investments very often use speculative investment and trading strategies. There is no guarantee that the investment program will be successful. Alternative investments are designed only for investors who are able to tolerate the full loss of an investment. These products are not suitable for every investor even if the investor does meet the financial requirements. It is important to consult with your investment professional to determine how these investments might fit your asset allocation, risk profile, and tax situation. Derivatives can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on performance. Employing leverage may result in increased volatility. These investments are designed for investors who understand and are willing to accept these risks. Options involve substantial risk and are not suitable for all investors. Prior to buying or selling an option, investors must receive a copy of "Characteristics and Risks of Standardized Options." Copies of this document may be obtained from an investment professional, from any exchange on which options are traded, or by contacting The Options Clearing Corporation at One North Wacker Drive, Suite 500, Chicago, IL 60606 (phone: 1-800-678-4667).