Selling puts can reward investors in a stagnant or rising stock market as the trader would collect premiums, or yields, if the strike price remains below the current market price of a security.
PUTX is not the first “put write” ETF from ALPS. The issuer also sponsors the ALPS U.S, Equity High Volatility Put Write Fund (NYSEArca: HVPW) is an income-generating fund that produces yields by selling two-month 15% out-of-the-money put options on 20 diversified stocks with the highest implied volatility.
HVPW sells 60 day listed put options every 2 months, or 6 times per year, on 20 stocks. The ETF will try to pay out net investment income of about 1.5% of the fund’s net assets at the end of each 60-day period. [A Put Write ETF for Prudent Income Investors]
ETF Trends editorial team contributed to this article.