Covered calls are one of my favorite strategies. They’re safe…
Simple to make (once you get the hang of them)…
And can create double-digit yields on stocks that don’t pay any dividends.
The thing is, getting started with covered calls can be tricky. Especially if you’re new to options.
That’s where today’s ETF comes in.
See, this ETF does it all for you. You just buy it like any other stock…
And the ETF automatically uses the covered call trading strategy to generate money and pay it out to you as dividends.
As you’re about to see, it’s very lucrative – the yield is sitting at more than 10%.
That’s why in my premium newsletter service, The Dividend Hunter, I’ve collected a number of these “automated” covered call ETFs.
To see how you can get hold of them and all 34 stocks in my high-yield, low-risk portfolio, click here.
As for today’s automated covered call ETF, it’s called the Global X Russell 2000 Covered Call ETF (RYLD).
Here’s how I recently described RYLD to my paid The Dividend Hunter members:
The RYLD portfolio owns stocks to mirror the Russell 2000 Index. The index includes the smallest 2000 stocks by market cap, from the Russell 3000 Index, which covers the entire U.S. stock market. Market participants view the Russell 2000 Index as the primary index-tracking small-cap stocks. The iShares’ Russell 2000 index ETF (IWM) provides investment exposure to the index and can be used as a benchmark for RYLD.
According to the Global X ETF’s website: “RYLD follows a similar approach to the Nasdaq 100 Covered Call ETF (QYLD), which writes at-the-money covered calls on the Nasdaq 100 Index. Both RYLD and QYLD sell monthly index options written at-the-money and rolled over each month.”
RYLD launched in April 2019. Here are the total returns since launch and for the last year, compared to IWM and QYLD. RYLD currently yields 10.6%, and QYLD yields 11.8%.
Since April 23, 2019:
· RYLD: 25.58%
· IWM: 44.95%
· QYLD: 22.99%
One-year return through September 30:
· RYLD: 35.12%
· IWM: 42.40%
· QYLD: 12.34%
· QQQ: 21.99%
I am in shock! While they use the same options selling strategy, RYLD performed much better than QYLD both in total returns and in capturing the returns of the underlying index for these time frames. I have been thinking a lot about expanding the number of covered call ETFs on the Dividend Hunter recommendations list. I think that move will happen soon. Added a year ago, QYLD was my first foray into this type of income investment.
To make sure you get notified as soon as I add another automated covered call ETF to The Dividend Hunter portfolio, join the service today – click here to see how.