What’s A Covered Call ETF?
A Covered Call ETF is an ETF Managed by an Investment Firm, that writes Covered Call Options against either the underlying Index ETF or the specified Individual Stock. This type of strategy is a bearish play, meaning they don’t believe their selected ETF or Stock will reach their Option Strike price. The underlying position can still go up, but as long as it doesn’t reach their price they sold, they will win the position. All of these options have an selected Expiration Date, meaning that they will all expire on that specified date.
What Are Some Examples Currently In The Industry?
The one used in the calculator above is $QYLD, this is one of the first that came out and is using an 100% allocation, meaning it will sell covered calls on 100% of its holdings. Some others not mentioned are $XYLD, $QYLG, and $XYLG.
What’s The Covered Call Strategy For The Selected ETFs Above?
$QYLD – Index Covered Call Options against the Nasdaq 100 Index (100% Allocation).
$QYLG – Index Covered Call Options against the Nasdaq 100 Index / Nasdaq 100 Growth (50/50% Allocation).
$XYLD – Index Covered Call Options against the S&P 500 Index (100% Allocation).
$XYLG – Index Covered Call Options against the S&P 500 Index / S&P 500 Growth (50/50% Allocation).