Nascent hedge fund manager Pirate Capital is considering selling covered calls in order to ramp up returns in its soon to be launched Jolly Roger Fund. Andrew Stotland, director of sales in Greenwich, Conn., said the fund will primarily take long positions in U.S. equities and fixed income products. Pirate will consider selling covered call options where it sees yield boosting opportunities.
Real Estate Investment Trusts will make up about 50% of the fund with other investments being made in value stocks. The fund won't sell covered call options in industries such as technology, where Pirate sees little value in the assets, he added.
The Jolly Roger Fund is expected to launch in January with seed capital of USD5 million. Bear Stearns is the prime broker and any options will likely be executed with the firm, Stotland said.
