Why JPMorgan’s Options Expert Says Individual Stock Calls Have ‘Eaten all the Downside’

Hamilton Rayner, a portfolio manager astatine JPMorgan Asset Management overseeing the firm's equity premium income ETFs, made a pointed lawsuit connected the Animal Spirits Podcast conception "Talk Your Book: The Biggest Active ETF" for wherefore selling options connected idiosyncratic stocks is fundamentally flawed for income investors. His statement cuts to the bosom of a structural hazard galore retail investors place erstwhile chasing output done single-stock covered calls.

Rayner illustrated the hazard with a factual illustration from precocious 2025. "Let's spell backmost to November. What happened? I deliberation Google was up astir 15% and NVIDIA was down 15%. If you sold options connected some of them, you would person been capped retired successful your Google and eaten each the downside successful NVIDIA."

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The terms information backs this up. Alphabet (NASDAQ:GOOGL) roseate astir 13% betwixt aboriginal and precocious November 2025. NVIDIA (NASDAQ:NVDA) fell astir 14% implicit that aforesaid window. A single-stock options seller would person collected a humble premium connected Alphabet portion missing astir of the upside, past absorbed the afloat diminution successful NVIDIA with nary offsetting mechanism. That asymmetry is the halfway problem.

The solution Rayner points to is index-level options. By utilizing index-level options instead, "you get each the alpha of Google. As good arsenic each the alpha with NVIDIA, but you don't get capped retired connected your winners and near with your losers." When the options overlay operates astatine the scale level, idiosyncratic stocks tally freely portion volatility is managed crossed the afloat portfolio.