UBS YES Strategy Leads to Substantial Losses for Investors

Most investment strategies rely on the stock market moving in one direction or another. Investors either make money when their stocks go up in value, or they make money by betting that the value of certain stocks will go down. But, the yield enhancement strategy (YES) is different. With the YES strategy, investors profit from market stability.

Or, at least that’s how it is supposed to work in theory.

UBS was one of the main investment firms pushing the YES strategy in recent years. Specifically, the firm promoted the YES strategy to wealthy investors as a way to generate returns when “normal” investment strategies tend not to perform as well — when the market is relatively stable. Many of the firm’s well-heeled clients saw the UBS YES strategy as a way to increase their overall returns, and many of these clients bought in heavily.

The strategy worked for a while. In fact, for several years, many investors were able to reap substantial returns. By purchasing multiple options and then letting those options expire when the strike price wasn’t met, investors were able to collect option premiums thanks to low market volatility — and they were able to do it time and time again.

Then, as all good things do, the YES party came to an end. The market began seeing significant volatility in 2018, and the YES strategy began to fail. Yet, UBS advisors continued to promote the strategy because it allowed them to earn commissions no matter what. In the end, many investors suffered millions of dollars in losses, and many now have no choice but to seek to recoup their losses through FINRA arbitration.