QRG's Large Cap Core Portfolio

QRG’s use of call and put options can lead to losses because of adverse movements in the price or value of the underlying stock or index which may be magnified by certain features of the options. These risks are heightened when QRG uses options to enhance a client’s return. When selling a call option, a client will receive a premium; however, this premium may not be enough to offset a loss incurred by the client if the price of the underlying security is above or below, respectively, the strike price by an amount equal to or greater than the premium. The value of an option may be adversely affected if the market for the option becomes less liquid and will be affected by changes in the value or yield of the option’s underlying asset, an increase in interest rates, a change in the actual or perceived volatility of the stock market or the underlying asset and the remaining time to expiration. Additionally, the value of an option does not increase or decrease at the same rate as the underlying securities. Writing a call in a position can lead to an assignment and involuntary transaction (i.e., “called away”), which cannot otherwise be avoided, upon an exercise of a call in the client account. When purchasing a put, a client’s entire initial investment of premium can be lost.

Option trading involves a significant degree of risk, which each prospective investor should seriously consider. The risk of loss in trading options can be substantial and options are not suitable for all investors. Prospective clients should carefully consider whether such trading is suitable for them in light of their financial condition and individual risk tolerances. The high degree of leverage that is often obtainable in options trading can work against investors as well as for them. More information on the risks of buying and selling options contracts can be found on the CBOE’s website at https://www.theocc.com/company-information/documents-and-archives/publications