Covered Call ETFs Mute Volatility, Generate Income

December 13th at 8:00am by Max Chen

Covered call exchange traded funds can help investors get paid along the way. However, people should understand how the strategy reacts to different market conditions.

ETF Trendsā€™ Tom Lydon sat down with Howard J. Atkinson, Managing Director at Horizons ETFs Management (USA LLC) Inc., at the Charles Schwab IMPACT 2013 conferenceĀ in Washington, D.C. to discuss the the covered call strategy and Horizons ETFs’ inroad into the U.S. market. [Covered Call ETFs Boost and Diversify Income Portfolios]

“Covered call strategies work well in three of the four market environments,” Atkinson said. “Raging bull market – they tend to underperform…. But in a modest bull market, at a trading-range market, or a bear market, they will outperform, give you lower volatility and give you some income to boot.”

The Horizons S&P 500 Covered Call ETF (NYSEArca: HSPX) is Horizons ETFs’ first U.S.-listed fund product. Advisors looking to take a more tactical approach to covered call ETFs can consider the Horizons Financial Select Sector Covered Call ETF (NYSEArca: HFIN), which is just a few weeks old and tracks the S&P Financial Select Sector Covered Call Index. [A Covered Call ETF Helps Boost Your Income]

Watch the video below to see the full interview with Howard Atkinson.

To view past video interviews, visit our video section.

Tickers

HFIN HSPX