“Covered call strategies work well in three of the four market environments,” Howard J. Atkinson, Managing Director at Horizons ETFs Management, previously told ETF Trends. “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.”
Along with HSPX, investors looking to take a more tactical approach to covered call ETFs can consider the Horizons Financial Select Sector Covered Call ETF (NYSEArca: HFIN), which tracks the S&P Financial Select Sector Covered Call Index. HFIN also issues dividends monthly, with a recent distribution yield of 5.36%.
Alternatively, investors can take a look at other covered call, or “buywrite,” ETF options. The Powershares S&P 500 BuyWrite Portfolio (NYSEArca: PBP), the largest buywrite ETF with $278.5 million in assets, has a 12-month yield of 1.37%. Other covered call ETFs include the AdvisorShares STAR Global Buy-Write ETF (NYSEArca: VEGA) and the iPath CBOE S&P 500 BuyWrite ETN (NYSEArca: BWV).
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