The so-called Options 2.0 strategies are an evolution from the first-generation of simple but fully covered-call and put writing options strategies. In this case, KNG combines a covered-call or buy-write strategy with long-term capital appreciation associated with a dividend growth factor.
Specifically, the underlying index includes two parts: An equal-weight portfolio of the stocks contained in the S&P 500 Dividend Aristocrats Index that have options that trade on a national securities exchange, and a rolling series of short call options on each of the Aristocrat stocks.
“Investors have been challenged since the global financial crisis to find sources of income without introducing duration and credit risk into their portfolios. KNG, with its dividend grower stock selection and covered-call options strategy, offers a novel approach,” Steve Neamtz, President of Cboe Vest, said.
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CORRECTION: CBOE Vest, a subsidiary of Cboe Global Markets Inc.