HAYDN FROGGATT | from iInvest

What’s a derivative, and how can they help your investment strategy? In the latest episode, I sit down with Haydn Froggatt, Director and Head of Desk at iInvest Trading and Advisory, to unravel the mysteries of options and reflect on the evolution of markets. With 35 years in the game, Haydn brings a wealth of wisdom—from the chaotic days of open outcry trading floors to today’s sleek screen-based systems.

Haydn’s journey began in the early 1990s on Sydney’s options floor, a buzzing hub where equity trading had just shifted to screens. “It was amazing to learn from the old guys,” he recalls, describing how the shift to digital opened markets to retail investors. No more chasing market makers for prices—quotes flashed instantly, democratizing access and sparking a new era of opportunity.

So, what’s an option? Haydn breaks it down: a call option lets you lock in a buy price, betting on a stock’s rise, while a put option secures a sell price, acting as insurance if it dips. For beginners, he spotlights a gem: the sold put strategy. Imagine you’ve got $100,000 to invest in BHP, trading at $40. Instead of buying outright, sell a $39.50 put option. You pocket a premium—say, $1,000—and if BHP stays above $39.50, the cash is yours. If it drops, you buy at a discount. “It’s a lower-risk way to build a portfolio,” Haydn says, emphasizing the need for cash to cover liabilities.

Then there’s the covered call, a classic for income seekers. Own ANZ at $29.50? Sell a $30 call option, earn a premium, and if the stock doesn’t hit $30, you keep the cash. If it does, you sell at a profit—plus the bonus. “It’s underused in Australia,” Haydn notes, urging investors to embrace its simplicity. Add in the collar—buying a put for protection while selling a call to offset costs—and you’ve got a toolkit to manage risk and reward.

Phil and Haydn also explore market evolution. From chalkboards to computers, transparency has soared, but pitfalls remain. “Understand your risk,” Haydn warns. Naked trading—taking on leverage beyond your means—has fueled infamous blow-ups. Stick to what you can cover, and options become a powerful ally, not a gamble.

For Haydn, it’s about long-term vision. At iInvest, an “old-school broker” focused on stock picks and general advice, he helps clients—many with self-managed super funds—build portfolios blending dividends and option premiums. “Double the dividend yield” is the goal, though markets, as ever, defy guarantees. His advice? Take a three-to-five-year view, diversify, and don’t chase get-rich-quick tips from the pub.

Want to dive deeper? Visit iinvestadvisory.com or follow iInvest on socials

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EPISODE TRANSCRIPT

Hayden Froggatt: I think with the current political climate, I think definitely you understanding what sort of insurance and what sort of hedging you could do for portfolios but also understanding how times like this when volatility is starting to return to the market can be great opportunities for option traders because premiums can jump quite a bit and that can be when we as option traders and I do this to myself can look for great our chances to pick up good premium on stocks that we'd like to own.

Phil: G'day and welcome back to Shares for Beginners. I'm Phil Muscatello. What's a derivative and how can they be used in your investment strategy? Um, how have markets evolved since the days of open outcry trading floors. Joining me in this episode as someone who's just celebrated 35 years in the industry. G'day, Hayden.

Hayden Froggatt: G'day, Phil. How you going?

Phil: Very well, thank you. Thank you very much for joining me on the podcast.

Hayden Froggatt: Fantastic. Happy to be here.

Phil: Hayden Froggatt is the director head of desk at I Invest Trading and Advisory, a boutique financial services firm offering stockbroking and wealth management services. So I just spendt a little bit of time but I haven't done this for a couple of years where I want to look back on what it used to be like on the old fashioned trading floors. What was it like that first morning that you walked in for the first time into the industry? What was it like in those days?

Hayden Froggatt: Yeah Phil, certainly a long time ago. I first started on the floor after the equity market had had stopped trading. It had gone to screen trading. So I started on what was the options floor. It took over the original equity floor. So uh, 20 Bo Street. I think it was in Sydney and started down there yesr of early 1990 and it was amazing to learn all about equity markets and from a lot of the old guys that have been around for a long time how the option market had evolved. It started in Australia about 1978, how it had grown and how options could be used and learning it from the guys that were providing the pricing for trading. So learning from guys that really understood the in depth component of options, the big benefits. I think as we move forward in options and the evolution of uh, market in Australia was once a floor closed going to screen trading. While many of us weren't confident about it, it really ended up being Opening up the market I think for clients to get involved because pricing was so much easier to understand when we were a floor based market. You had to go chasing a price from market makers to really get an understanding of where the price would be going. To the screen system you're able to request quotes via the computer system and they would appear in front of you. So that made the whole thing much more open to retail investing.

Phil: So was it the old fashioned floor with the chalkboards on the sides of the walls?

Hayden Froggatt: No, when I started we'd gone to basically we were a floor based screen trading environment. So it was open outcry but then the transactions were all done via computer in front of the, you know, the trading pit.

Phil: Okay, so just getting back to where you are today and I can see that my autocorrector said online grocer rather than online broker.

Hayden Froggatt: I did see, yeah.

Phil: And I just sor. Just realized that uh. So what's the difference between an online broker uh, and a full service broker?

Hayden Froggatt: Look, I suppose the big difference is a full service broker uh, is someone that's really there to help you and talk you through what you're looking for. Investments to take into account your goals, your investment, understanding your capital requirements and really what your investment parameters are versus utilizing an online broker. You uh, are basically making those decisions yourself. We as a broker that offers the full service component will probably have better access to research, really have a better feel for what the market is doing and maybe able to help give you tips and ideas about executing transactions as well as helping you build a portfolio that will uh, suit your needs and desires.

Phil: So there's two kind of services that you offer. One of the derivatives and options and so forth. But there's also direct investment in the share market. What is it that you look for in a particular company?

Hayden Froggatt: Look for me I sort of focus on building portfolios for clients. I probably am not looking for the ah, in the equity market for short term trading as much. For me it's more building portfolios that are going to stand as sort of a five year sort of period and looking for whether it be a growth portfolio or an income focus portfolio or a mix of both. So a lot of that will depend on the investors requirements and then we look to build a portfolio around that taking into account market trends and research ideas and uh, uh, price targets and things like that.

Phil: So are you looking basically at the big end of the market or do you also look at small caps as well?

Hayden Froggatt: Look, probably we're focusing more for a portfolio is probably More the larger caps probably top 200. Really focusing on companies that have got solid track records, good research parameters around them and good research reports and are going to give uh, when we're building a portfolio for someone is looking for more that longer term share market investment. Really companies that are going to survive and thrive over the period.

Phil: Are there any particular metrics that you rely on?

Hayden Froggatt: Certainly be looking at earnings per share, growth

00:05:00

Hayden Froggatt: yield numbers. Certainly that's something you definitely focus on. Many investors certainly guys in super are looking for that yield components and looking at what yields are being offered and then managing the risk around that. So really knowing where the right sort of yield is for the right sector. I've always looked at the banking sector and sort of looked at if you cannot, if you're buying a bank at a yield under what the government or the reserve bank rate is, then you're taking on a risk that makes no sense. And if we look at CBA as a case, right now the yield'around 3% when the RBA cash rates 4.1%. Why would you be buying CBA if you're a yield investor? Because you're basically getting a 1% lower return and you're taking market risk. And that's something that we would look at. Say we really haven't been buyers of CBA over the last six months because of those reasons. With this pullback that we've seen in the banks in the last week or two, the other banks, Andz Nabs and West bank have started to look attracting on that sort of matrix. So. So that's where we start to look at those sort of things and those sort of traps that could appear.

Phil: What about franking credits? Do you factor that into the equation as well?

Hayden Froggatt: Yeah, definitely. We'd be looking at a grossed up yield. But when I suppose if you're comparing against a straight cash rate, then we definitely would look at that frank up or grossed up yield to compare. And then if you take that in that CBA example, you're probably buying CBA at maybe slightly above the cash rate where I think really with the cash rates, uh, currently 4.1%, I wouldn't want to be buying any bankit under about a five and a half percent yield because I have market risk within there. So they're the sort of factors that we'd really focus on.

Phil: So when you say market risk, that's the price could also go up and down as well. Is that how you factor that into the equation that you're thinking about with a bank share like that?

Hayden Froggatt: Definitely, yeah. With any stock you've got to consider market risk and obviously market events occur. One of the things people sort of look at with banks, you remember they lend money and lending money is a risky business. Now our banks in Australia are very, very good at managing their lending risks but they do sometimes lend to people and certainly in some of their corporate lending over many years has been a bit poor and that's where they get trapped. So you've got to really understand what sort of environment the market is or the economy is in. When you're looking at banks as an.

Phil: Investment and you mentioned yield and that's dividend, isn't it, that they're interchangeable terms, aren't they?

Hayden Froggatt: They definitely are, yes. Yes.

Phil: So what are some of the common themes that you see people wanting to invest their money in the share market? And I also should point out that this question could have a subtext of what are the misconceptions people have about investing in the share market when they come to you?

Hayden Froggatt: Look, that's an interesting one I suppose you'd look at for investors coming into the market is understanding that it is a medium to long term investment. In most cases, uh, we really are not a get rich quick scheme and if you're chasing that then I think you're going to be disappointed. I mean some people do have that sort of success and we'll make quick profits. But I think for the average person coming into the market looking for a medium to long term return is the focus probably no different to property. You don't sort of jump in and buy a property and expect to sell it in two months time. You've got to look at that longer time frame. So the share market really is no different. The main I suppose benefit of the share market is your ability to diversify. You can look at different shares in different sectors and then if a sector is underperforming, certainly you can move out of that sector, uh, into another sector of the market, uh, while still remaining uh, an investor in the share market as such. And that's where I suppose there's so many fantastic products we have now that can offer us a broad range of investments through one single vehicle, something like an exchange traded fund or some of the portfolio management services. We've got one we offer which lets a professional pick investments for you and they manage the portfolio accordingly. So there's lots of those sort of products around. But also for any investor that is coming to the market, I think you've got to take a three to five year view as A minimum if you want to be an investor.

Phil: And do you find people actually coming along and going what sort of company should I buy? Thinking that it's just going to be one, one stock that's going to make or break their portfolio?

Hayden Froggatt: Yeah, definitely. And they're generally people that have had a tip from someone that know, given them, you know, a local at the pub said oh, you should buy this stock. And they're just focused on that rather than looking at investing as a whole sort of uh, environment where you've got to consider lots of stocks and lots, lots of sectors in the market and you know, not sort of putting all your risk or all your egs in one basket as I saying, is looking to manage your risk and an understanding that spreading your, your exposure to the market is a great way to uh, build a portfolio.

Phil: You mentioned sectors just a minute ago. Does that mean that you sort of look at a sector before drilling down into any particular company?

Hayden Froggatt: Yeah, look, definitely we would. So we might look at our view on resources and then it may be a certain type of resource. Obviously iron orees a very big subject for Australian companies with a couple of our majors being heavily involved in the iron ore sector. So then you look, if you're looking at iron ore then you've got to be looking at Chinese growth numbers because you've got to be looking at steel exports out of China. So you sort of look at those factors first and then you might sort of drill down and say, well if you're liking the IR oil sector, which of the major three iron ore companies would you look at? Exposure to? Bhp, Fortescue or Rio? That they all have different parameters around them. That would be how we would work through any recommendation around uh, an iron ore stock. So that might be our sector, uh, analysis.

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Phil: Okay, let's turn to derivatives and options.

Hayden Froggatt: Sure.

Phil: What are uh, exchange traded options?

Hayden Froggatt: Okay, well so there's two classes of options that we trade in Australian market. A call option and a put option. I think the simple way to explain a call option, if you buy a call option, you're basically locking in a price that you can buy the stock at over a certain period of time. So you can, as the buyer of a call, you can call the stock from someone so you can make them sell you the stock at a set price. Now we reverse it and look at a put option. A put option is basically you're locking in a sale price for the stock. So uh, if you own some shares and say BHP and wanted to make sure you could sell them at say $39 over the next six months by buying that put option you can lock in that price that you can sell the shares to or put the shares ono someone'a uh, good way to think of it at that $39. So call Options you would buy if you think the market's going up. Put options you would buy if you own the stock and you think the market may fall and that locks in a sale price for you. So that's put option could be considered an insurance for an owner of a share where a call option is a cheap way to get exposure to a share if you think the share is going to run up.

Phil: So who uses options? Well, uh, in terms of your clientele, obviously you can't talk about everyone in the broad market, but who are the kind of people that would benefit from using options?

Hayden Froggatt: Look, options, it's an interesting one. It certainly institutional investors in Australia use options a lot and so many of our big funds and professional investors. But really for retail investors options are actually a fantastic tool once you understand the benefits and the advantages of using them. If I can so jump into explaining a great strategy which I think will help explain what sort of clients could use the option market. One of the questions you had for me today was regarding a sold put option. And this is a great strategy for someone who wants to build a portfolio. We'll take a fictitious number. Let's say we had $100,000 we wanted to put into a particular stock. Might be sort of looking to buy two a half thousand BHP shares at around about $100,000. So rather than going in the market buying Those shares at'Say $40 where BHP trading at the moment, we could look at selling a put option to buy those shares at say $39.50. So a little bit cheaper than the current price. Now by taking on that liability, we're going to get paid a premium to accept the liability. So we might get paid 50 cents a share. So over our two and half thousand shares we exposure we're going to get paid a bit over thousand dollars in premium. If BHP shares are above 3.9dol50 we get to keep that premium when the option expires. If they're below 3.9dol 5cent we would be Forced to buy the shares. If you take our 3.9dol $0.50 as the price we're buying at at we've already got 50 cents in option premium. So really we're buying the shares at $39. So it's a great way to look at getting into a stock cheaper rather than going in now and buying the share at $40. So that's a great strategy for clients that want to start building a portfolio. Not in a rush to do it but want to look at ways to maximize or, or minimize their costs I suppose would be a great way to look at it uh, of entering into certain stocks. So that's something I do for a lot of retail clients and a lot of clientses said we're starting to build portfolios and this is a trade we look to do to build that portfolio. You can't do it on every stock but there's about 60 odd stocks that we could enter this strategy on and they'd all be stocks that you could consider in a portfolio. So the sole puts a great strategy for a new investor.

Phil: Yeah, it's interesting to cover something because there's millions of options strategies aren't there that, that you can um, undertake and you kind of get lost in it. And one of the things also people get lost in is that idea of uh, what your responsibility is. You know that you have the right but not necessarily the need to buy or sell that particular company when it expires.

Hayden Froggatt: Yeah definitely look and understanding how you'd manage liabilities and obviously how you can reverse the liability if you have got a sold option, how you can reverse it if you want to change your mind or the markets moved in the right direction for you, you can always take a profit, uh, close position whenever you want. So there is lots of way of managing it. But for clients that just want to look at buying, as I said that $100,000 worth of shares, that simple sold put and we'd call it a sold covered put because you'd have to have the funds available to buy the stock. Then you're actually taking on less risk than the average investor who just jumps in the market today and buys the $100,000 worth of BHP. The sole put option if you've got the cash to cover it is a lower risk strategy. Something that really I think our market, we have struggled with our education around options. Uh, this is something where I'd love to see more retail clients consider this is a trade rather than just being a straight out stock buyer looking at what is a lower Risk strategy. If they have the capital to do the trade, this is really

00:15:00

Hayden Froggatt: something they should be considering.

Phil: And that's really important to understand that it's not a free ride. You actually do have to have the capital ready there to put up in case otherwise it becomes a naked uh, situation which no one actually wants to be in.

Hayden Froggatt: Very true. And that's something if you've ever read about any of the classic sort of blow ups that have happened in option markets. And many professionals and fund manager around the world have blown themselves up utilizing options. But it would be where they've taken on leverage above what their capital is. So it's a real key point is make sure the exposure you have is an exposure you can meet. And that's why we would say if you have that 100,000 you'prepared to put into a particular stock, then the ideda of that be be put would be a great one to consider. Uh, yeah, just knowing you've got your liability covered is really a key to that.

Phil: There's also a time component involved, isn't there? Explain how that works.

Hayden Froggatt: Yesah, certainly. So generally options are listed uh, up to about 12 months out withaps possibly a monthly expiry. We even have weekly expiries now in the Australian market. But it'll depend on you can choose what length of time you want exposure to. So you might say that in our be pea example, you're happy take exposure out to say May. So you would say I'm happy to sell a put, say a May 39 50s put. And so that means your exposure runs to the May options expir which is about the 20th of May. So uh, that's where the time component comes in. The more time you sell, obviously the more premium you'll receive for the same option strike. But then the longer period you've got exposure for. So you've got to sort of weigh those factors up. We would generally say 45 days. Is it probably a good sort of timefraame? If you are selling an option with the intent of buying the stock, that's probably where we'd sort of look as the sweet spot to enter that transaction.

Phil: And with the sold put option strategy, there's also the downside that if your strike price is 39 dolars 5 cent and BHP drops down to dollars that you will end up buying at that $9.50 price.

Hayden Froggatt: Correct. And absolutely. And so you've got to look at the stock that you're looking to enter this option strategy around that is a stock you want to Buy. If you're prepared to buy birchaired $40 today, then this strategy could be one you could look at because the worst case scenario is you're going to be buying the stock anyway, which is a strategy or which is an investment you're happy to make. You don't do this on stocks that you don't feel you'd like to own.

Phil: Yeah, I mean that's a really important thing to understand about it, isn't it? That uh, you've got to actually be laser focused on what your goals are, uh, in that long term, three to five year period, don't you?

Hayden Froggatt: Definitely. And yet you d want to y be confident that yeah, any stock we are looking to buy, we' we've done our research around, we're comfortable with the level we'd happ to buy the stock at. And that's where we could then look at basing an option strategy around our investment view.

Phil: Because many traders will actually just buy and sell the call and the put options without even any intention at all of buying the or selling the underlying stock.

Hayden Froggatt: Yeah, very true. So that's probably the more active part of the market and there's people that will speculate, you know, buying calls or buying puts based on their view of a potential move in the underlying stock. And that's fantastic. The trading part of the market'very important where what we're talking about here is more someone who's got an investment view of the underlying.

Phil: Okay, let's talk about a couple of other strategies. Option strategies and we've got the collar, which is an interesting one, which I hadn't heard about before. But first of all, the covered call, that's one of the most basic kind of option strategies, isn't it?

Hayden Froggatt: Look, it definitely is and it's something again I think very underused in the Australian market. We really should be doing more of this. So for anyone who owns a stock and we'll jump in and do Andz as our example now and stock sitting around around about 2950. If you were looking to gain some extra income against your AZ shares, you could look at selling a call option at'd say the $30 strike, so about 50 cents above the current share price. Basically what you're doing is you're giving someone the right to buy your shares off you at $30 and they're going to pay you a premium for you accepting that obligation. If the stock remains below $30 then you just get to keep the premium you've received. If the stock goes above 30$, then your liability would be you'd have to sell the shares that you own at that thirty dollar price. Bearing in mind you also got some option premium along the way. So you might actually get $30, 30 or something like that when you base it on the premium you received. So it's a great simple income strategy.

Phil: Yeah, but you have to actually be understand that you are obligated to sell if it goes in the money't you?

Hayden Froggatt: Yeah, definitely. That's something. You've got to be confident or comfortable that that price, uh, you would sell your Andz shares at. If not, then the covered call can still work. But you may need to be wary that you may have to buy the position back at expiry to avoid that stock sale. So it could work out whether your baker profit or not.

Phil: I just use that term in the money. So can you explain in the money, out of the money and at the money, which is also important concepts in the option strategy market?

Hayden Froggatt: Definitely, Phil. Um, so at the money obviously means a strike that is at or basically equivalent to the current share price of the stock. Out of the money will be in the case of a call option. It'll be a call option that is above the current share price.

00:20:00

Hayden Froggatt: And in the money would be in the case again of a call would be an option strike that is below the current share price. In put options I always to reverse that and in the money put will be above the current share price and an out of the money put would be below. Obviously the other money is the same.

Phil: In both concepts and that also has a bearing on whether the option will be exercised. Can you explain exercising an option?

Hayden Froggatt: Yeah, certainly. So we'll continue with the Andz example. So if we've sold our call option over our Anz shares and let's say we've gone out to the end of April, if at the end of April our ANZ shares are say at $30 50 and we've sold a call at $30 that calls obviously in the money. So the person who bought that call from us is going to want to purchase the shares at $30 from us because they're trading at $30.50, so they're well above the strike price. So that in the money position would be exercised at or near expiry.

Phil: So theoretically someone who's held their Anz shares for a number of years and they've been collecting the dividends, they're going to be sitting on, you know, some nice capital growth, hopefully. Presumably maybe not with the bank so much as other companies, but then they would say, okay, well that's great. If I have to sell, that's fine. I'll just lock in the uh, the capital gain. But then they've got to make the move into another stock and then they can use the sold put option before actually even doing that. Thus mult. Hopefully multiplying games.

Hayden Froggatt: Yeah, and look, I've got a lot of clients that would run that exact sort of strategy. They would. They basically sell the put option into the stock, write a covered call against the stock once, once they do buy it and then if they lose a stock through the covered call, then we look to jump back into whether it be the same stock or another stock with a new sell put option. So basically they're trying to keep the stock always or the capital always working, whether it be through holding a company and having a call sold against it or being in cash, but having put obligation against that cash. So trying to keep that exposure in place. Obviously there's dividends along the way. Know they'll try and pick up a dividend. You know, we're looking at stocks from investment point of view, so generally they'll be looking at you something with a decent dividend return and utilizing the option market to sort of the in between periods, uh, from when dividends are being paid. Trying to make sure we're getting some earnings along the way there.

Phil: I think it's really important to emphasize though that you do have to have a very much an overall strategy. It's very easy to become addicted to options and what they can offer. But you've always got to be thinking one or two, three, four, five steps ahead, don't you?

Hayden Froggatt: Yeah, certainly focusing on what you're looking to achieve and I suppose looking for stocks that are going to enhance the overall portfolio based on the dividend returns, but also what option premiums are being offered. You know, Telstra is a stock that has very little volatility, so it has very little offer in the way of option premiums where Fortescueu is a far more volatile stock, so has much more option premium when we're looking at sor of the same dollar exposure, uh, of positions. So focusing on that sort of thing, focusing on what dividend yield you're getting and what is the right mix of stocks for your portfolio.

Phil: Okay, let's move on to the collar. I love the names of these options strategies when you go through them. There's a million of them with highly, uh, creative names, aren't they?

Hayden Froggatt: But they certainly do. Yeah. So Callars, a pretty simple one. It is basically It's a protection strategy. So it's basically where you buy a put option so you buy the right to basically sell your shares. So it's like it's so insurance for your shares and then to help fund um, the cost of buying that put option you sell a covered call. So it's two trades. So you've got. We can use the Andz example, we own the A Andz shares, we sell a dollar call to get some premium in and we buy a $5 put to ensure our shares. So you've basically capppt your downside but unfortun you've also capped your upside. We really want to try and do these trades and we do them for a net credit. So we want to sell the call option for more than we're buying. The paying to buy the put option otherwise it's costing us to set the collar up. So we try and do we call it a zero cost collar is obviously the sort of one of the terms but if you can do them for a credit that's fantastic. But uh, obviously you really don't want to be paying to do a collar because otherwise if you've got that sort of a more of a negative view then there's better strategies. We could look at running.

Phil: Yeah, you mentioned the concept of protection and a lot of the larger uh, institutional fund managers, they will be protecting the downside risk by buying put options. Why aren't they? So this is a way of doing it but it's very difficult maybe to do that with a smaller portfolio.

Hayden Froggatt: Y look, it definitely is. So obviously if you haven't got a huge portfolio then definitely the collars, while it will still work, there's probably more simple things. Uh, maybe an index put option could be better. If you've got a you portfolio of a couple hundred thousand dollars spread over sort of top 200 companies then looking at index options could be another alternative. Just buying an index put might be the best transaction versus trying to do a collar on each of the individual holdings you have.

Phil: So many people, myself included, have uh, run into trouble trying to trade options. How can these dangers be minimized?

Hayden Froggatt: I think the key is

00:25:00

Hayden Froggatt: understanding your risk and that's why everything we've talked about today has been based off have someone having the capital to meet any liabilities they're taking on. If you are going to look at that are greater than your capital abilities then you really are running into what we call naked trading. And as said, every sort of classic blow up that's ever happened in the option market will Involve someone having leverage above their capability. If you can manage it and only keep your leverage to or your exposure to what your capabilities are that you could buy that stock in no matter what you've got the capital there, then you're not taking any greater risk than a standard equity investor. And I think that's the key. You can make income in the option market quite easily. It's managing your exposures and making sure that you know the classic one is make sure you can sleep at night, your exposures aren't causing you concerns because you know you can meet what you've got then. I think the option market is something more and more people should be looking at.

Phil: Yeah, downside risk. It's something everyone should be looking at in any phase of the share market.

Hayden Froggatt: Yeah, definitely, definitely. I think with the current political uh, climate I think definitely having know understanding what sort of insurance and what sort of hedging you could do for portfolios but also understanding how times like this when volatility is starting to return to the market can be great opportunities for option traders because premiums can jump quite a bit. And that can be when we as option traders and I do this for myself can look for greater chances to pick up good premium on stocks that we'd like to own. A BHP classic example. I'd be happy to sell some puts in bedspe for myself right now. If I could buy it around $39 I'd be very happy. So I might be able to get a quite large premium versus what I was getting six months ago because we're seeing more volatile environment.

Phil: What kind of shop is it that you run? I mean just explaining it to investors because people are used to online brokers, you know com m sick or whatever n trade and or financial advisors. Are you kind of straddling the world in between?

Hayden Froggatt: Yeah, look we're probably the classic old school broker. We're focused on picking stocks, providing recommendations. We generally focused on general advice. These days the full service stuff is we leave to fun financial planners because of their requirements around that. So yeah, look I can explain probably the easiest way to say look I investors an old school broing firm that focuses on building portfolios and making stock recommendations to investors.

Phil: Are there many of you guys around?

Hayden Froggatt: I don't think there's a lot left. Uh yeah, I mean yeah, I think it's most of them have gone to that down that planning road and obviously charge fees more around that sort of service of a portfolio management service where we're more that traditional broker.

Phil: Are many of your Clients running their own smsf.

Hayden Froggatt: Yeah, definitely have quite a lot of clients that are utilising uh, Superfund, um, smfs trading and utilizing options within that. Protecting the portfolios within super funds is obviously become very popular but also income related strategies. So covered calls definitely a big one for self managed super and just a general portfolio building focus.

Phil: Yeah, uh, interesting now it's just always good because talking to old school brokers really do give you insights into the market that a lot of other you know, fund managers don't really give you.

Hayden Froggatt: Yeah and look I think really that's a real laziness if we're off record there.

Phil: It's a real totally on the record.

Hayden Froggatt: It is a real laziness of many of these offerings. They, they you know they'll pick six ETFs and put you in those. And so that's where it is. We're still more of uh, a stock.

Phil: Selection process generating alpha as they say in the industry.

Hayden Froggatt: Ye, that's it, that's it.

Phil: How have the returns been? I mean can you speak to that?

Hayden Froggatt: Look, it's a really hard one to say because so many clients run such different portfolios. When we're looking at setting up one of these uh, type of things where we're utilizinged calls and the sold covered put strategy we would generally try and say that if we can double what the dividend yield would be on the underlying stock that's probably a simple way to consider it. But markets do uh, what markets do and so you can never really sort of give any guarantees around that. It's more. That's a good idea of what we'd like to see clients achieve.

Phil: Would you consider your clients to be more sophisticated style investors that actually understand a bit more about how markets work and they want to be involved on.

Hayden Froggatt: A daily basis I think they build into that. Many people will come into uh, and talk to us about strategies and building a portfolio and as we educate them on the power of options and its uses then their understanding grows and their level sophistication and understanding the market really increases. So it's really can build over time. And once you're doing a transaction and you're in the trade if you'sold to put and we know we're going have to buy the underlying if it gets exercised the client really starts to get a feel for how it works and you understanding their risk requirements and the liabilities and the reporting components, all those factors sort of start to make sense.

Phil: So if listeners want to find out more about I investt where can they go?

Hayden Froggatt: Yeah, certainly jump on our website, uh, ivestadvisory.com or check us out on socials. We certainly are pretty active there, and I'm sure myself or one of my team would be more than happy to talk through, uh, what we offer and maybe how options could be, uh,

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Hayden Froggatt: a good tool for any new investors.

Phil: Yeah, you are active on the socials because that's how I came across you guys with Georgia, who works with you, making some comments on my Shares for Beginner Facebook group chat page.

Hayden Froggatt: Excellent.

Phil: Um, yeah, please encourage her to do a bit more. Indeed.

Hayden Froggatt: Yeah, no problem. Uh, I'll talk to her about that shortly.

Phil: Hay and Froggatt, thank you very much for joining me today.

Hayden Froggatt: Thanks, Phil. Catch up soon.

Chloe: Thanks for listening to Shares for Beginners. You can find more at sharesforbeginners do. Com. If you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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