Korean asset managers are ramping up derivatives-driven ETF strategies from covered calls to synthetic protective puts as demand for yield and volatility management fuels rapid market growth, supported by regulatory easing and expanding institutional interest.
When Kiwoom Investment Asset Management planned on an exchange-traded fund (ETF) launch in South Korea to protect against market downturns through option-based strategies, the Seoul-based issuer wrestled with ideas. To reduce trading costs arising from frequent rebalancing, we introduced a new structural approach - Kyung-jun Lee, Kiwoom Investment AM The high cost of option premiums using put options in covered call ETFs, the long-dated maturities and the need to explain the complexity