"Our options writing strategy is based on a fundamental belief that the Standard & Poor’s 100 Index (OEX), a diversified basket of the largest US companies, cannot continually rise in value month after month, and conversely, that it cannot decline indefinitely."

Over the past 80 years, the Dow Jones Industrial Average (DJIA) has posted an average annual total return of approximately 8% - 9%. The OEX, which holds all 30 DJIA companies, averages similar total returns (plus or minus 1%). "Assuming" that expanding capitalism and global growth continues, we expect the long-term index returns to be similar to historic norms.

Further, we have a high degree of confidence that the large market-capitalization base of the OEX (over US$7 trillion) will not quickly rise in value. Of course, there have been periods when annual returns were higher than normal. Predictably enough, shortly afterwards the index paused or declined in value.

In our opinion, the policy of Standard & Poor’s to remove the weakest corporations from the OEX each year is the main reason for the index’s long-term gains. This Darwinian-style selection process of retaining the 100 strongest, most relevant growth companies assures us that the OEX will continue to increase in value over the long term.

Sharp market declines do happen, a 10% or 20% market correction occurs periodically. Even greater declines or "crashes" have taken place: 1929, 1987, from 2000 to 2002, and October 2008. However, our faith in the OEX, together with a strong belief in global capitalism, gives us confidence that with time, patience and the ability to stay in the game (sufficient margin), our options writing strategy will continue to generate positive cash flow for our clients.

We introduced the "Top 100 Index Options Writing Strategy" in October 1998. Our strategy has since generated positive annual cash flow returns during the greatest US bull market of all time (1995 to 1999) and through several severe downturns.

To learn more about how we can create positive cash flow from our proven options-writing strategy, please see Methodology, Cash Flow Results, and Strategy Risks.