Covered Call ETFs

Continuing with the TSLA covered call ETF post, it should be clear that in bullish periods it will underperform the underlying (tongue twister - now say that 10 times please) instrument. And in bear markets, will take most of the beating that the underlying takes. Obvious stuff.

Here is a quick chart comparing TSLA vs TSLY year to date.

In addition, there will also be tax implications that if taking the position in the underlying you can potentially avail of long term gains whereas dividends won’t let you avail of that facility. But that would be the same whether you buy-in into an ETF like TSLY or decide to do the option selling yourself.

To reduce risk a bit, a similar idea would be to look into ETFs that employ covered calls on a basket of stocks instead of a single tickers. Ofcourse based on volatility of the basket, the yeild wont be as juicy but principal safety is something that needs to be accounted for.

With that in mind here is a quick list of US based ETFs sorted by current yield:

Similarly here is a list of ETFs trading on bay street for my Canadian friends.

https://wealthawesome.com/best-covered-call-etfs-in-canada/

Until next time, adios.

-gariki