Global X Monthly Covered Call Report
The Global X Research Team is pleased to release the distribution and premium numbers for our covered call ETFs for February 2023. Global X’s Covered Call suite of ETFs generally invest in the underlying securities of an index and sell call options on that index or an ETF tracking the underlying equity index. These strategies are designed to provide investors with an alternative source of income, while offering different sources of risks and returns to an income-oriented portfolio.
Click here to download the February 2023 Covered Call Report
With corporate earnings in the spotlight and 99% of S&P 500 companies having issued Q4 2022 earnings for 2023, we can see how options markets may potentially be impacted moving forward while assessing the impacts on the premiums received by the Global X Covered Call ETF suite.1 One key data point was regarding S&P 500 earnings growth which saw its first decline of -4.6% since Q3 2020.2 In addition to this, 81 of the 105 S&P 500 companies who issued earnings guidance, indicated negative earnings trajectories.3 However, the VIX, a measurement of S&P 500 implied volatility, recorded a modest increase of 0.86% measured from 01/20/2023 to 02/17/2023.4 The different sectors and indices on which the covered call suite are based tended to incur different levels of volatility throughout this same timeframe, leading to mixed levels of February premiums for the funds.5 This may potentially indicate that the market had already priced corporate guidance and revisions in and is awaiting more information to assess future, dynamic and strategic allocations as Q1 2023 nears its end.
1As a general guideline, the monthly distribution of QYLD, XYLD, RYLD & DJIA is approximately capped at the lower of: a) half of premiums received, or b) 1% of net asset value (NAV). For QYLG, XYLG, RYLG, TYLG, HYLG, & FYLG, the monthly distribution is approximately capped at the lower of: a) half of premiums received, or b) 0.5% of net asset value (NAV). The excess amount of option premiums received, if applicable, is reinvested into the fund. Year-end distributions can exceed the general guideline due to capital gains that are paid out at the end of the year.
Fund Premiums and Implied Index Volatility
Disclaimer: Options Premiums vs. Implied Volatility graphs include implied volatility for the Nasdaq 100, S&P 500, Russell 2000, and Dow Jones Industrial Average Indexes. QYLG, XYLG, and RYLG write covered calls on these same, aforementioned equity indices, thus, their premiums are not displayed here. TYLG, HYLG, and FYLG have only rolled their options portfolios three times, therefore Options Premiums vs. Implied Volatility graphs are currently not displayed for these ETFs and are expected to be added once more option premium data is received.
KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X
To learn more about our covered call options, read the latest research from Global X, including:
- Introducing the Global X Sector Covered Call & Growth ETFs (TYLG, FYLG, HYLG)
- Covered Call Strategies, Explained
- RYLD: A Covered Call Strategy for Rising Rates
Related ETFs
QYLD – Global X Nasdaq 100 Covered Call ETF
XYLD- Global X S&P 500 Covered Call ETF
RYLD- Global X Russell 2000 Covered Call ETF
DJIA – Global X Dow 30 Covered Call ETF
QYLG – Global X Nasdaq 100 Covered Call & Growth ETF
XYLG – Global X S&P 500 Covered Call & Growth ETF
RYLG – Global X Russell 2000 Covered Call & Growth ETF
TYLG – Global X Information Technology Covered Call & Growth ETF
HYLG – Global X Health Care Covered Call & Growth ETF
FYLG – Global X Financials Covered Call & Growth ETF
Click the fund name above to view current holdings. Holdings are subject to change. Current and future holdings are subject to risk.
