UBS customers who have lost money in the UBS Yield Enhancement Strategy (UBS YES), may be able to recover losses by filing an arbitration claim against the firm with FINRA. While a small portion of customers affected by the UBS yield enhancement plan have filed arbitrations and are obtaining awards, many others are still in the process of doing so.
UBS YES involved investing in options with a complex series of put and call spreads with the same expiration date and different strike prices with a strategy called an “iron condor”.
An iron condor is a type of option trading strategy that involves purchasing two options, the first with a higher strike price and expiry date than the second, and then selling the first and buying the second. If the price of both options rises by the same amount on the same day, the gain will be the difference between the two strike prices minus the difference between the cost of the first option and the second. For example, if you buy an $85 call at the end of a month, with a strike price of $90, and sell it for $100 and buy another call for $80, at the end of the month you’ll have made a profit of $ 2. But if the price of both options rises by $10, you’ll end up with a loss of $5.
UBS used iron condors and marketed its Yield Enhancement Strategy as a safe way for investors to increase return on their money at a time when interest rates were low. Unfortunately, it was quite risky, the risk may not have been adequately disclosed, and some investors lost a lot of money.
For more information, and to discuss a potential claim call Sallah Astarita & Cox, LLC at 212-509-6544. The firm represents investors and financial professionals across the country and has represented parties in over 700 arbitrations.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.