Covered call ETFs are increasingly popular in a low-yield environment, providing steady passive income through dividends. By combining diversified stock portfolios with the income-generating strategy of writing call options, these funds deliver yields that surpass traditional dividend stocks. Monthly distributions are enhanced by premiums obtained from call options, making these ETFs attractive to retirees and those prioritizing cash flow. However, potential capital growth is capped during market rallies. Noteworthy examples include JPMorgan Equity Premium Income ETF, which offers a robust distribution yield and focuses on low-volatility stocks.
Covered call exchange-traded funds (ETFs) offer a blend of stock portfolio stability and income through selling call options, appealing to income-focused investors.
These ETFs generate higher yields than traditional dividend stocks by writing call options on their holdings, collecting premiums that enhance monthly distributions.
While providing downside protection, covered call ETFs may limit upside potential in strong market rallies, balancing the trade-off between income generation and growth.
JPMorgan Equity Premium Income ETF (JEPI) stands out with an 8.4% monthly distribution yield and a strategy involving low-volatility, large-cap U.S. stocks.
Collection
[
|
...
]