The investment and securities fraud attorneys at Malecki Law are currently investigating UBS’s Yield Enhancement Strategy (“YES”) for the purpose of investor recoveries. Our attorneys are interested in hearing from investors and others who have information and/or have experienced losses due to UBS YES or other complex yield enhancing investments regardless of the brokerage firm.
It appears that the YES strategy may have been sold to UBS clients as a conservative and low-risk investment strategy that would provide them with an increased yield (income) in their portfolio. In fact, in our opinion, the strategy was an esoteric leveraged options strategy that utilized an options strategy known as the Iron Condor, which is inherently risky as it relies on consistent stability in the markets.
USB YES employing the esoteric Iron Condor strategy uses a leveraged options strategy in a client’s portfolio. UBS would use the client’s assets as collateral in a margin account then execute four different options trades, simultaneously selling calls and puts in an attempt to generate income and buying calls and puts in an attempt to hedge risk. This resulted in the creation of a price spread. If the price of the index or security the options were a derivative of stayed within the spread it would produce a premium to the investor. However, the excessive volatility experienced by the markets recently and most notably in the fourth quarter of 2018 blew through these spreads resulting in serious losses to investors.