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STK: Hedging And Yield Spread Analysis


  • The Columbia Seligman Premium Technology Growth Fund follows a covered call strategy on the S&P North America Technology Sector Index.
  • The strategy uses rules-based call option writing designed to seek capital appreciation, provide current income, and mitigate downside volatility.
  • This article performs a closer examination of the fund in terms of income, growth, and volatility to further examine its pros and cons, and suggests a method for hedging some.
  • This article also describes a method based on yield spread to gauge the short-term risks of investing in this fund at its current price, and the results show relatively thin margin of safety.
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The Columbia Seligman Premium Technology Growth Fund (NYSE:STK) follows a covered call strategy on the S&P North America Technology Sector Index. The fund invests in 50-65 diversified technology companies across market capitalizations. At the same time, the fund also uses rules-based

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** Disclosure** I am associated with Envision Research

I am an economist by training, with a focus on financial economics. After I completed my PhD, I have been professionally working as a quantitative modeler, with a focus on the mortgage market, commercial market, and the banking industry for more than a decade. And at the same time, I have been managing several investment accounts for my family for the past 15 years, going through two market crashes and an incredible long bull market in between. 

My writing interests are mostly asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets. I have been a long time SA reader, and am excited to become a more active participator in this wonderful community! 

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EDV, QQQ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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