Anyone know how mutual funds that are selling options are treating the income associated with them? Seriously. Does 100% of the benefit accrue to the specific fund holding the underlying? If not, how is it done....
This is not correct. In each fund prospectus it outlines what managers can/cannot do, vast majority of funds exclude option activity. Some use covered call income (EXG/EOS for example) but the profit/loss is returned to the shareholders.
Look at AMZN auto-callable securities issued by Morgan Stanley in Feb 2012. This was an option income security.
Majority of weekly options are written by traders/market makers, taking the wider bid/ask and basically skimming theta and gamma, whilst managing delta.