Generating Income Through Covered-Call Writing ETFs

ETF Trends

After the financial crisis, more investors are looking for strategies that generate income, limit volatility and diversify traditional portfolios. Covered call ETFs are specifically designed to deliver on these goals.

For example, Horizons ETFs Group recently introduced Horizons S&P 500 Covered Call ETF (HSPX).

In a covered call strategy, an investor who owns a stock sells call options, and collects the income from the premiums paid by the buyer of the option.

HSPX is the first covered call ETF strategy that writes on individual S&P 500 stocks. The fund “answers a growing need for maintaining regular income streams in a persistent low-interest-rate and shrinking-yield environment,” said Howard Atkinson, Managing Director of Horizons USA. [Horizons Looks to Broaden ETF Business]

PowerShares S&P 500 BuyWrite Portfolio (PBP) is another ETF in the category.

On Wednesday, August 7, ETFtrends.com editor and publisher will moderate a webcast discussion on how a covered call strategy can potentially increase the income and reduce the volatility of a core equity position in the S&P 500.

Against a backdrop of low interest rates, investors may be finding it difficult to maintain the level of income they need from their investment portfolios. Covered call writing is a method for generating additional income from a stock portfolio. It has been used for decades by professional investors aiming to enhance yield while reducing volatility.

Featured speakers include:

  • Howard Atkinson, CFA, CIMA, Managing Director, Horizons ETFs
  • Joe Cunningham, Executive Vice President and Head of Capital Markets, Horizons ETFs
  • Berlinda Liu, Director, Index Research and Design, S&P Dow Jones Indices

Financial advisors can registor for the webast here. Accepted for 1 CFP and CIMA CE Credit.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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