How Covered Call ETFs Can Help Generate Income in Any Market
The financial markets have been extremely volatile over the past year as geopolitical tensions, high inflation, and rising interest rates have rocked asset prices. With so much uncertainty continuing to swirl, many investors are understandably concerned about protecting the purchasing power of their portfolios during these turbulent times. While getting too defensive could hinder growth potential, failing to generate income leaves your savings susceptible to erosion from inflation. Thankfully, a covered call strategy employed through exchange-traded funds (ETFs) offers a balanced approach that focuses on generating steady income while mitigating downside risk.
One of the leading covered call ETFs is the Global X Nasdaq 100 Covered Call ETF (QYLD). This fund employs a “buy-write” strategy, whereby it owns all the securities in the Nasdaq 100 Index and simultaneously writes or sells call options on that same index. A covered call strategy seeks to augment the income generated from stock dividends and option premiums. With over nine years of steady monthly distributions totaling more than $9.5 billion paid out, QYLD provides an insightful case study on how this options strategy can deliver income stability in changing market conditions.
Generating Income from Premiums
