We now have strategy-in-a-box ETFs designed to give you whatever an options strategy is designed to give. Covered Call ETFs like RYLD, XYLD, and QYLD are becoming increasingly popular. Here’s what you need to know about how they work.
Notes
Covered Call ETF
Covered Call = Buy Write = Covered Write = Covered Stock
Systematic, rules-based fund that replicates a perpetual cov call position.
XYLD, QYLD, RYLD = Global X
- Know what you are buying. The better you understand the covered call strategy, the better you will understand WHY these funds behave the way they do.
- Underperform in really bullish markets b/c the short call caps your gain.
- Outperform in mildly bullish, neutral, or bearish markets.
- Con: cap gain
- Pro: less volatility, less downside risk.
QYLD = Nasdaq-100 Cov call ETF.
Does better than QQQ in neutral/mildly bullish/bearish environments
Does worse than QQQ in bull market.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
