Covered call ETFs have gained popularity due to their attractive yields, appealing to passive income investors. However, while they offer an opportunity for increased income without the risks associated with distressing single stocks or REITs, higher yields may come with heightened risks. Understanding these funds is essential before investing, as they can limit potential upside during market upswings, which could deter investors betting on sustained growth. Investors must weigh the benefits of covered call strategies against the potential for increased volatility and reduced profits during bull markets.
Covered call ETFs offer high yields and potentially lower risks than individual stocks, but investors must be aware of the associated dangers with high yields.
Despite their allure, relying on high yield from covered call ETFs requires careful consideration of risks, as well as understanding the strategies involved before investing.
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