Volatility Worries Creating Fans of Option Writing Funds

Option writing funds are all the rage now due to increasing use in pension plans, growth in the number of mutual funds using them and a new Morningstar category.
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Wait a second. How did option writing mutual funds get so popular all of a sudden? "Visibility for option writing strategies has seen tremendous growth," said Michael Buckius, portfolio manager for the Gateway Fund (GATEX) - Get Report . "Increasing use in pension plans, growth in the number of mutual funds and assets using them, a new Morningstar category. It's really taking off." Buckius said the option market is attractive now because premiums increase with volatility. In his view, volatility in the market is experiencing a "cycle within a cycle." That is, the macro volatility cycle suggests that since August of last year the market has been in the first part of a multi-year period of average to elevated volatility.