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Here's a quick look at the somewhat unique covered-call-writing ETF with a generous 4.6% yield. ... picking and choosing the best covered call options to write, and when, across its entire stock ...
Like covered-call ETFs, you're basically "capping" your upside potential. But instead of for premium income, you're limiting your downside to a certain percentage.
This is the best-case scenario when selling covered calls in general. ... is an ideal scenario for a covered call ETF's share price, and all it could manage was a 5% gain. To be sure, a flat-to ...
The writing of the call option provides extra income for an investor who is willing to forego some upside potential. The BXM Index is designed to show the hypothetical performance of a strategy in which an investor buys a portfolio of the S&P 500 stocks, and also sells (or writes) covered call options on the S&P 500 Index.
Options, including put options and call options, can be written or purchased on most ETFs – which is not possible with mutual funds, allowing investors to implement strategies such as covered calls on ETFs. There are also several ETFs that implement covered call strategies within the funds. [33] [34] [35]
A covered call is a basic options strategy that involves selling a call option (or “going short” as the pros call it) for every 100 shares of the underlying stock that you own. It’s a ...