Covered Call Strategies Uncovered
SUMMARY
INTRODUCTION
JP Morgan has been a late-comer to the ETF industry, but achieved remarkable success in the actively-managed ETF space as it manages the two largest products, namely the JPMorgan Equity Premium Income ETF (JEPI) with $26 billion and JPMorgan Ultra-Short Income ETF (JPST) with $24 billion of assets under management.
Intuitively, investors might have expected growth or value-focused products from well-known active managers like Fidelity or PIMCO to dominate, but instead, JEPI represents a covered call strategy.
JEPI represents a portfolio of large-cap stocks that is combined with selling call options to generate monthly income. The objective, like for all covered call strategies, is to offer index-like returns with lower volatility but higher dividends. In this research article, we will explore if covered call products have been able to meet these goals.
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