CoveredCallETFs.com

This website is meant to be a brief introduction to one of the increasingly popular ETFs: Covered Call ETFs. In both Canada and the US, Covered Call ETFs have been launched in the past few months and have been gaining traction as a great product to tailor specific needs, mostly for retail and small instituational clients that would find it too expensive to replicate a similar strategy on their own. Some clients have financial advisers replicating a similar strategy but in almost all cases it becomes a more expensive proposition. Here are some of the subjects discussed on this website:

-Covered Call ETF or Covered Call on ETF?

-Who should buy Covered Call ETFs?

-Costs involved for the fund

-Why you should avoid doing it on your own

-5 benefits of covered call ETFs

-5 downsides to covered call ETFs

-Why use covered call ETFs?

-What happens when options are exercised?

-Best covered call ETFs

-Index ETF dividend yield vs Covered Call ETF dividend yield

-How to use covered call ETFs

-Covered Call ETF tax treatment

-Covered Call resources

-Covereed Call strategies

-Covered Call in a passive income portfolio

-Covered call FAQs

What is a covered call ETF?

You probably already know what a standard ETF is. Basically, its a fund that owns specific assets. SPY is by far the largest ETF, it replicates the return of the S&P500 Index by buying the 500 stocks that are part of the index. To make this example easier to understand, lets talk about doing a covered call on a specific stock, Microsoft Corp (MSFT).

If you own 100 shares of Microsoft, you are receiving a dividend yield of around 2.51%. You could increase the income related to your position by selling a call. For example, if you sold 1 option (which covers 100 stocks) for a higher strike and received $0.15 per share, that would increase your dividend yield right? The downside? If the stocks price increases quickly, you might have to sell your stock at the lower stock price.

In conclusion, by selling the call you:

-Receive additional income

-Have more limited upside

A covered call ETF on the S&P500 would replicate that same strategy on a portion of the 500 stocks of the index in order to increase the income (repaid as dividend) against more limited upside. To many, that is a very interesting proposition. We go into more details here.

We will also be discussing some of the current covered call ETFs, resources, etc. As always, we will be more than happy to answer any questions that you might have regarding covered call ETFs.