Covered Call ETFs: 8 Key Features & Benefits Explained | Best ETFs for High Dividend Passive INCOME!

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The two important fact to note: when reading a particular fund managers covered call strategy are:

1. what % of the portfolio do they write call options on
2. if they are at the money calls or out of the money calls . That is called the “moneyness of the call option”

Is one better than the other?
Personally I don't think so, they're just different.
The goal is really the same, to make more income while still making sure the ETF share price can grow, although at a reduced rate.

8 Benefits of owning Covered Call ETFs long term

1. Higher Yield vs Regular Dividend ETFs

2. Great Performance during Volatility

3. Easy way to diversify a Portfolio

4. 2 Income Streams instead of 1.

5.Safer and Consistent Source of Income vs Single Dividend Stocks

6.Low Management Fee for what you get

7.Passive “Hand off” Strategy

8.Tax Efficient Income

Great benefits right, what about the downsides? Well there's only 1
You're potentially sacrificing some share price upside. I stress the word potentially because it's when the stock market is in Strong BULL mode, or stock prices are dramatically rising that the CC Options the fund manager sells would be exercised right. In a FLAT or downward market, it's all free money. I also stress the word SOME, because like we saw earlier, the fund manager only sells CC’s on a certain % of the portfolio, not the entire thing.

What does this mean in practical terms, well it means that in terms of share price performance over the long term, CC ETFs will never beat an identical ETF that doesn't use the CC Strategy.

So the million dollar question, Why were these ETFs created? For who were they designed for?
These ETFs are specifically designed for Investors who are looking to get maximum cash flow, or maximum income without any added risks like leverage for example
They are perfect for Passive Income investors like myself who just want to BUY and HOLD ...that don't want the hassle of deciding when to sell stocks to make a profit.
I'm up 20% on this thing, should i sell it, should i wait.
I don’t want that stress or anxiety. I want simple and easy. I want maximum income, every month and I don't want to be worried or care about what the stock market is doing.

The fact that CC ETFs actually perform better during stock market volatility and crashes is a HUGE psychological advantage and very underrated if you ask me. Imagine, not caring about what the stock market is doing, consistently getting income every month regardless of what nonsense is happening in the economy. CC ETFs can give you that peace of mind.
They are a perfect fit for retirees. Because retirees want cash flow, they want income, they don't want to think about when to sell shares, they want to enjoy the rest of their lives in peace and happiness. CC ETFs not only provide stellar, consistent income but also peace of mind.They were designed to BUY and HOLD, not buy low and sell high. If you want to play that game you're much better off investing in individual stocks or going to the Casino.
Most of the critics of these ETFs always mention the same thing, the stock price trend is not good.
And there right, but listen my friend, I don't care about stock price trends. Why would I if I don't intend to sell my shares anytime soon? Why would I ever sell my shares if it's giving me income every month.

Think about it… if you have a CC ETF that's giving you 7.5% Dividend Yield a year. Which means your making 7.5% interest a year. 7.5% is pretty common with these ETFs BTW...

After about 13 years, you make all your money back (or you initial investment) in Dividends alone. Every dividend payment after that, as well as how much the stock is worth is pure profit. And what have you done for 13 years, nothing!
What have you relied on to make all your money back?

Nothing, all you need to do is stay alive.
#passiveincome #investing #coveredcalletfs #coveredcalls #calloptions #optionstrading #canadianstocks
Disclaimer:
Not a licensed investment advisor, videos are educational.

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