What is a covered call ETF?

The largest covered call ETFs, as measured by assets under management, are the Global X NASDAQ 100 Covered Call ETF (QYLD) and the Global X S&P 500 Covered Call ETF (XYLD). The most popular ETF that includes covered call writing among its multiple strategies is the JPMorgan Equity Premium Income ETF (JEPI) . How Do Covered Call ETFs Work?

What is Global X NASDAQ 100 covered call ETF?

It seeks to track the Cboe Nasdaq-100 BuyWrite V2 Index. Global X Nasdaq 100 Covered Call ETF has $7.7 billion in AUM and trades in a solid volume of 4.7 million shares a day on average. It charges 60 bps in annual fees from investors and has higher yields of 12.25%.

Why is a covered call ETF better than the S&P 500?

Partly due to the increase in returns when market volatility is high, a covered call approach is usually considerably less volatile than the market itself. A covered call ETF will also perform quite differently than the S&P 500 during particular years.

What are the disadvantages of covered call exchange-traded funds (ETFs)?

One drawback of this strategy is the effort and capital required to buy enough shares to cover the options you sell and then sell the options. Covered call exchange-traded funds (ETFs) allow investors to buy shares in a fund that conducts this strategy on their behalf, offering its benefits with less effort.