Derivatives Project

Your role is a CFA-investment adviser. Your client has $5,000,000 as follows:

Retirement $2.5M, 80% equity, 20% fixed income

Non retirement $2.5M, asset allocation to be determined.

Your return assumptions are: equity 10%, fixed income 4%, cash 0%.

You will design a strategy using options, equity, fixed income, and cash. Your time horizon is 5 years.

In the retirement account, he will contribute $20,000/ year into equity.

Your project will take into consideration taxes, margin requirements, volatility, risk management among other considerations