After the financial crisis, more investors are looking for strategies that generate income, limit volatility and diversify traditional portfolios. Covered call ETFs are specifically designed to deliver on these goals.
For example, Horizons ETFs Group recently introduced Horizons S&P 500 Covered Call ETF (NYSEArca: HSPX).
In a covered call strategy, an investor who owns a stock sells call options, and collects the income from the premiums paid by the buyer of the option.
HSPX is the first covered call ETF strategy that writes on individual S&P 500 stocks. The fund “answers a growing need for maintaining regular income streams in a persistent low-interest-rate and shrinking-yield environment,” said Howard Atkinson, Managing Director of Horizons USA. [Horizons Looks to Broaden ETF Business]