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Profiting with Synthetic Annuities: Option Strategies to Increase Yield and Control Portfolio Risk by Michael Lovelady

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9. Synthetic Annuities for the Bond Market

This chapter looks at how a synthetic annuity can be applied to the bond market. In particular, for investors who are concerned about a rebound in interest rates—and a corresponding decrease in bond prices—this chapter includes an example of a SynA used to enhance yields and to hedge bond prices.

This includes a discussion of bond market dynamics and the attractiveness of a particular investment thesis, made even more attractive by how well the thesis fits with the natural adjustments inherent in a bond SynA.

This chapter ends with an excerpt from a paper by James Bullard of the St. Louis Federal Reserve Bank. I think he has an interesting perspective on future inflation and bond yields.

Is This a Cyclical ...

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