Investors focused on an income generating portfolio don’t have to adhere to bonds. Instead, with exchange traded funds, people can accrue some extra cash with a covered call equity strategy.
ETF Trends’ Tom Lydon sat down with Howard J. Atkinson, Managing Director at Horizons ETFs Management (USA) LLC, at the Morningstar ETF Invest Conference in Chicago to discuss Horizons’ foray into the U.S. ETF market and the firm’s new covered call ETF.
By utilizing 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. Covered call writing is a method for generating additional income from a stock portfolio. It has been used to enhance yield while reducing volatility.
“It addresses the income needs, and investors are income starved when you look at today’s low interest rates, potential for rates to rise and ten thousand baby boomers turning 65 every day and that’s going to occur for the next 15 years – people are living a lot longer,” Atkinson said.
Horizons ETFs recently introduced the Horizons S&P 500 Covered Call ETF (NYSEArca: HSPX). [Covered Call ETFs Boost and Diversify Income Portfolios]
“If you need income for a long time and you need to get it from more sources than just fixed income, this allows you to get a little more income from your equity portion of a portfolio,” Atkinson added.
Watch the video below to see the full interview with Howard Atkinson.
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