Covered Call Strategies Uncovered

Covered Call Strategies Uncovered

SUMMARY

  • Covered call strategies aim to offer index-like returns with lower volatility and higher yields
  • They have underperformed their benchmarks significantly over longer periods
  • They are tools for market timing, but that is difficult to execute successfully

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.

Continue to full article....

RELATED TOOLS

Know Your Factors

RELATED RESEARCH

Preferential Times for Preferred Income Strategies?

The Case Against Equity Income Funds

Resist the Siren Call of High Dividend Yields

Dividend Yield Combinations

Value Factor: Improving the Tax Efficiency

Factor Exposure Analysis 101

要查看或添加评论,请登录

Finominal的更多文章

社区洞察

其他会员也浏览了