Exchange-traded funds (ETFs) have revolutionized investment, providing diverse and low-cost exposure to various asset classes while being traded like stocks, making them highly liquid and tax efficient. A growing trend among ETFs is covered call strategies that generate income through selling call options, appealing to those seeking yield amidst market volatility. However, while they promise higher returns in uncertain markets, their inherent limitations, especially regarding capped capital gains, raise questions about their long-term viability. The recent launch of a new covered call ETF raises further considerations for potential investors.
Covered call ETFs allow investors to generate income via options strategy, attracting attention for their potential yields in volatile markets, yet capping upside in strong growth.
The rise of covered call ETFs signifies a shift in investor focus towards income generation amidst market volatility, but their performance hinges on strategic option management.
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