July 2024 was marked by exceptional volatility in global financial markets. The so-called 'Magnificent-7', a group of seven large technology companies that have dominated the market in recent years (Apple, Microsoft, Alphabet, Amazon, Nvidia, and Meta), experienced a significant decline, with a return of -4.20%. However, amid this turbulent scenario, the Numa Defender Technology Strategy (NDT) investment strategy demonstrated its resilience, outperforming the benchmark index composed of the Mag-6 by -2.70%.
NDT is an investment strategy that focuses on selling put options on a diversified basket of high-growth technology stocks and ETFs. This basket includes options on AAPL, AMD, AMZN, APP, CLS, GOOG, META, MSFT, NTNX, NVDA, SMCI, SNOW, SOXX, and TSM. By selling put options, NDT collects an upfront premium, generating income even if the underlying stock price declines.
A key aspect that contributed to NDT's superior performance in July was its focus on risk management. The strategy incorporates an additional layer of protection through the sale of call options (Short Calls) on the shares assigned from the Short Puts. In this way, if share prices decline or remain flat, a profit is generated from the premium received for the Short Call; and if they rise, they are sold at a predetermined price.
NDT proves to be a valuable strategy for Numa clients, offering a solution that mitigates losses in bear markets and maximizes gains in bull markets.
