Money For the Rest of Us

Unlocking Income: A Comprehensive Guide to Investing in Covered Call ETFs

Mar 20, 2024

Delve into covered call strategies for generating income, understanding risks, and realistic return expectations. Explore topics like mechanics of covered call options, risks and gains, and strategies with index funds. Learn about investments like JP Morgan Equity Premium Income ETF and Global X NASDAQ 100 Covered Call ETF. Compare covered call ETF returns with underlying TLT ETF and explore income generation with put options.

27:38

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Quick takeaways

Covered call ETFs provide income by selling call options on underlying investments, offsetting potential losses with premium income.

Understanding the risks, returns, and mechanics of covered call strategies is essential for successful income generation.

Deep dives

Understanding Covered Call Strategy in ETFs

Covered call ETFs such as the JP Morgan Equity Premium Income ETF and the Global X NASDAQ 100 Covered Call ETF employ a strategy where investors buy an underlying investment like stocks or bonds and simultaneously sell call options on those investments. By selling call options, they receive premium income similar to an insurance policy, compensating for potential losses if the underlying investment price goes up. This strategy offers the opportunity to earn income from both premiums and dividends, but entails risks of limited upside and unlimited downside.

Introduction

3min

Exploring Covered Call Investment Strategies

6min

Exploring Risks and Gains in Covered Call Strategies with a Featured Sponsor Ad

3min

Understanding Covered Call Strategies with Index Funds

6min

Insights into Covered Call Strategy and Premium Income Variation

3min

Exploring Covered Call Strategies for Income and Exposure

8min

Exploring Income Generation with Put Options and Covered Call ETFs

3min

How to use covered call and buy-write strategies to generate income while understanding the risks and having realistic return expectations.

Topics covered include:

How covered call strategies work
How much can you earn investing in covered call strategies
What are some numerical examples based on current option prices
How covered call strategies can be used for both stock and bond ETFs
What are some covered call ETF examples

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Long Angle is a private community of 2,500 very high net worth investors who leverage their collective expertise and scale to access and underwrite some of the world’s best alternative asset investments. Learn more here.

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Investments Mentioned

JP Morgan Equity Premium Income ETF (JEPI)

JP Morgan Equity Premium Income Fund (JEPIX)

Global X NASDAQ 100 Covered Call ETF (QYLD)

Global X S&P 500® Covered Call ETF (XYLD)

iShares 20+ Year Trs Bd Buywrt Stgy ETF (TLTW)