New BuyWrite ETFs Coming
November 30th at 2:30pm by Tom Lydon
PowerShares is set to launch the first family of BuyWrite exchange traded funds (ETFs) in December 2007. They will provide access to but-write option strategies on three of the most widely used benchmarks -the S&P 500, Dow Jones Industrial Average, and NASDAQ-100 Indexes.
The company states that buy-write strategies are often used to reduce volatility, during certain market conditions, and can provide additional income to a portfolio through call option premiums. In a buy-wright investment strategy an investor buys stocks and then writes covered call options on them. Barclays introduced a buy-write ETN in May. iPath CBOE S&P 500 BuyWrite Index ETN (BWV) is up 0.4% since inception.
The new ETFs anticipated on December 20th include:
- PowerShares S&P 500 BuyWrite Portfolio (PBP)
- PowerShares DJIA BuyWrite Portfolio (PGB)
- PowerShares NASDAQ-100 BuyWrite Portfolio (PQBW)
