What is side-by-side management in trading?

Side-by-side management in trading refers to the practice of trading a security and an option on that same security simultaneously, often on the same exchange. This strategy allows traders or investment managers to take advantage of price movements in the underlying security while also utilizing derivatives to hedge or amplify returns. By trading both the security and its option at the same time, managers can dynamically manage risk and respond to market conditions more effectively.

This concept is particularly relevant in the context of investment management where the objectives are to optimize performance and manage risk concurrently. It provides the opportunity to enhance returns while controlling exposure to downside risk through the use of options.

The other options do not accurately capture the definition of side-by-side management. Trading two different securities involves completely separate instruments, and managing multiple investment accounts without aggregation doesn’t relate to simultaneous trading of a security and its options. Finally, trading only non-overlapping securities does not encompass the concept of managing positions in a single security alongside its options.