Negative Correlation
Almost no asset classes exist which provide strong negative correlation. It is intuitive to option practitioners, but rarely understood by market participants that the sale of a covered call or purchase of a put will create a position that has negative correlation to it's underlying asset.
Covered calls have a payoff when their underlying asset declines in value or does not rise above a specified strike price. This inverse payoff with the underlying asset is negative correlation.
Almost no asset classes exist which provide strong negative correlation. It is intuitive to option practitioners, but rarely understood by market participants that the sale of a covered call or purchase of a put will create a position that has negative correlation to it's underlying asset.
Covered calls have a payoff when their underlying asset declines in value or does not rise above a specified strike price. This inverse payoff with the underlying asset is negative correlation.