Who this is for.
Concentrated stock
Shareholders with single-name exposure that is overweight the market and carries significant embedded gains.
Low-basis legacy holdings
Inherited or decades-held positions where the tax bill may impede traditional decisions.
Large taxable accounts
Households where after-tax outcome, not gross return, is the primary objective.
How can we help?
A concentrated position can be a risk problem, a tax problem, and an emotional problem at the same time, and selling solves one while potentially creating another. An overlay works on the position the investor already owns. Two structures generate income or pace an exit; four buy protection at different prices. Which one fits depends on what a drawdown could do to the investor's plan, and on what they are willing to give up.
Covered Call Income
In plain words: the investor keeps the stock and sells someone else the right to buy it above today's price, collecting a premium for doing so.
- Objective
- Generate income off the position with the goal of retaining as many shares as possible.
- Investor profile
- The investor plans to keep the stock but wants to generate income off a position that is otherwise stagnant.
- Key considerations
- The option generates income, but the equity is still exposed to a significant drawdown.
- Gains above the strike are given up. If the stock runs past the strike price, we aim to buy the call back before expiration and either sell shares or use cash to cover the cost to close.
- A higher strike means less income but more upside participation.
- Not appropriate when
- The investor is set on never selling shares, or thinks the stock will outperform market expectations.
| Upside | Capped at the strike |
|---|---|
| Downside | Not protected |
| Net cost | Investor receives premium |
Covered Call Transition
In plain words: the same covered call, but the strike is set at a price the investor would be happy to sell at — so the calls drive the exit plan rather than just earning income.
- Objective
- Sell the position down into strength, spreading the tax bill across years.
- Investor profile
- The investor has decided to diversify but does not want to sell all at once. They are comfortable selling if the stock reaches the strike price. They know the position is too large, but they do not need protection right now.
- Key considerations
- The investor is willing to sell as the stock goes up, so the calls set the pace of the exit rather than focusing on income alone.
- If the stock trades above the strike, we aim to buy the call back before expiration and sell the shares deliberately. Shares are not exercised unless the investor specifies.
- The stock sets the pace of the transition. If price stays below the strike, the investor retains the shares and the premium collected.
- Not appropriate when
- The investor's financial plan would be disrupted if the stock experienced a meaningful drawdown.
| Upside | Capped at the strike |
|---|---|
| Downside | Not protected |
| Net cost | Investor receives premium |
Collar
In plain words: the investor buys a put below the market and sells a call above it, limiting both the downside loss and the upside gain — the call pays for the put.
- Objective
- Put a floor under the stock, paid for by capping the upside.
- Investor profile
- A big drop would change this investor's plan, and they do not want to pay out of pocket to prevent it. They will accept a ceiling on gains in exchange for a floor.
- Key considerations
- Can be structured as costless, or as a debit if the investor prefers to pay some out of pocket for added upside.
- Gains above the call strike are given up. If the stock runs past the strike price, we aim to buy the call back before expiration and either sell shares or use cash to cover the cost to close.
- The purchased put, the floor, holds until the options expire or the structure is reset.
- Not appropriate when
- The investor will not accept a ceiling on gains, or is looking to generate income off the position in addition to protection.
| Upside | Capped at the strike |
|---|---|
| Downside | Protected below the strike |
| Net cost | Can be structured for little or no cost |
Buffered Collar
In plain words: a collar that uses a range of puts, so a set band of losses is absorbed (“buffered”) before the investor feels the full impact of a big drop. The cheaper protection buys a higher cap.
- Objective
- Keep more upside than a standard collar by buying less downside protection.
- Investor profile
- The investor wants real protection against an ordinary drop but can live through a severe one. In exchange for taking that risk, they get a higher cap.
- Key considerations
- Using a put spread instead of a plain put costs less, and that saving allows for a higher cap.
- Protection covers a set range. Below the bottom of that range the investor is exposed to further decline.
- As with a standard collar, gains above the call strike are given up and we buy the call back before expiration.
- Only available in taxable accounts.
- Not appropriate when
- A severe drop is the biggest concern. In that case, keep the full put rather than spreading it.
| Upside | Capped, higher than a collar |
|---|---|
| Downside | Protected over a set range |
| Net cost | Little or no cost |
Put Spread
In plain words: the investor buys one protective put and sells another at a lower price, creating a band of downside protection at a lower cost than a full put — and keeps all of the upside.
- Objective
- Buy protection over a set range of decline without giving away upside.
- Investor profile
- The investor will not give up upside and is willing to pay for protection, but wants to spend less than a full put costs. They see an ordinary drop as the more likely risk.
- Key considerations
- All of the upside is kept, less the premium paid.
- Protection only covers a set range. Below the lower strike the investor is exposed to further decline.
- Only available in taxable accounts.
- Not appropriate when
- The premium costs more than the investor is willing to spend, or a severe drop is the biggest concern.
| Upside | Kept in full |
|---|---|
| Downside | Protected over a set range |
| Net cost | Investor pays premium |
Put Purchase
In plain words: the investor simply buys put options on the stock they own, limiting how much they can lose if it falls. Nothing is sold, so nothing is capped.
- Objective
- Put a hard floor under the stock with unlimited upside.
- Investor profile
- A big drop would derail this investor's plan, they still believe in the stock, and they would rather pay cash for protection than give up any gains.
- Key considerations
- The most expensive structure.
- The floor holds until expiration, and there is no ceiling on gains.
- Cost rises with volatility and with time to expiration.
- Not appropriate when
- The investor does not want to pay the premium, or would rather cap gains than pay for protection.
| Upside | Kept in full |
|---|---|
| Downside | Protected below the strike |
| Net cost | Investor pays the most here |
Payoff diagrams are illustrative only — schematic, not drawn to scale — and should not be interpreted as actual performance of any investor's account. Options involve risk and are not suitable for all investors.
Which overlay fits your client?
Send us the position and we will come back with a proposal — the structure we would use, the strikes and expiration, and what the outcomes look like at expiration. Or start with our strategy selection guide, which walks through the questions we ask and where each answer leads.
Need liquidity rather than income or protection? A box spread can act as a line of credit against the position, often priced close to Treasury rates — without selling shares or taking a high-interest margin loan.
Box Spread Loans →How can we support you?
One position at a time, in the investor's account, with you in the room. We design the structure with you, trade it, and manage it through expiration — and we write every step plainly enough to put in front of the investor.
Review the position and the plan
- The position itself: share count, cost basis, embedded gain, and how far overweight it is against the investor's plan
- Account type and restrictions — some structures are only available in taxable accounts
- The investor's goals, how much risk they can take, and the trade-offs they are willing to make
Choose the structure and illustrate it
- Select from the six structures — income, transition, or one of four levels of protection
- Set the strikes and expiration around the investor's sell price, floor, and time horizon; decide whether the structure is costless or a debit
- Deliver a conceptual illustration of the outcomes at expiration under specific stock-price assumptions, so the investor sees the trade-off before anything is traded
Trade it in the investor's account
- We place and manage the option trades in the investor's own account — the shares never leave
- You keep the client relationship and the conversation; we handle the mechanics
- No share is sold or exercised away unless the investor specifies
Monitor, adjust, and reset
- We watch the position through expiration. If the stock runs past a call strike, we aim to buy the call back before expiration and either sell shares deliberately or use cash to cover the cost to close
- A purchased put holds until the options expire or the structure is reset
- At expiration the structure is reset, rolled, or retired as the investor's plan changes — a transition can pick up speed, an income overlay can become a collar
How we are different.
Built around the investor, not a product
Every overlay starts with what a drawdown would do to the investor's plan, then with what they will give up — upside, cash, or shares over time. The structure follows the answers. Six of them, not one.
The exit is deliberate
When a stock runs past a strike price, we aim to buy the call back before expiration and sell shares on purpose, or use cash to close. Shares are not exercised away unless the investor says so.
Active approach
Each overlay is designed around what we believe is the best strategy for the investor, not the most scalable one for us. Structures run shorter and are managed more actively, so risk is controlled without capping more upside than necessary.
Communication
Every trade and every change is communicated when it happens, backed by regular reporting and direct access to the portfolio managers running the overlay.
*Aptus Conceptual Illustration is for illustrative purposes only and should not be interpreted as actual performance of any investor’s account. These figures are entirely assumed to illustrate the possible outcomes of put and call options under specific stock price assumptions. As these are not actual results and completely assumed, they should not be relied upon for investment decisions. Actual results of individual investors will differ due to many factors, including individual investments and fees, client restrictions, different facts and circumstances, and the timing of investments and cash flows.
Call options give the owner the right to buy the underlying security at the specified price within a specific time period. Put options give the owner the right to sell the underlying security at the specified price within a specific time period. A collar is an options strategy constructed by holding shares of the underlying stock while simultaneously buying put options and selling call options against that holding. A put spread is constructed by buying one put option and selling another put option at a lower strike price on the same underlying security. A buffered collar is a collar that uses a put spread in place of a single put.
Investing involves risk. Options involve risk and are not suitable for all investors. Please refer to OCC’s Characteristics and Risks of Standardized Options and Aptus Capital Advisors’ ADV, which includes information on Aptus Capital Advisors’ services, specific Risk Statements, and Disclosures. Principal loss is possible.
Information presented is for educational purposes only. It is for informational purposes only and does not constitute a complete description of our investment services or performance. This material does not constitute financial, legal, or tax advice, or a recommendation to buy or sell any security. All investments involve risk and unless otherwise stated, are not guaranteed. Each solution is based on facts and circumstances that are designed to each individual’s use case and may vary from case to case and need. Be sure to consult with an investment & tax professional before implementing any investment strategy.