Investors looking to play defense while generating some income can do so with the Horizons S&P 500 Covered Call ETF (NYSEArca: HSPX). HSPX’s underlying index utilizes an “out-of-the-money” covered call strategy. The out-of-the-money call option will take a strike price higher than the current market price of the underlying security. The ETF issues a monthly dividend, with a recent distribution yield of about 2%. [Covered Call ETF Soars]
Another option to consider, particularly given the recent struggles of the financial services sector, is the Horizons Financial Select Sector Covered Call ETF (NYSEArca: HFIN). HFIN allows investors to remain positioned for a possible rebound in bank stocks while generating income and gaining downside protection.
The covered call strategy has outperformed during bear markets, range-bound markets and slightly bullish conditions. HFIN also pays a monthly dividend.