Monthly Covered Call Commentary
The Global X Research Team is pleased to release the distribution and premium numbers for our covered call ETFs for April 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, an ETF tracking the underlying equity index, or a similar 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 April 2023 Covered Call Report
Volatility metrics characterizing movements across the broader U.S. equity markets have trended negatively over the last few weeks, with the VIX receding from 22.92 at the start of trading on March 17th to 17.51 at the open on April 21st.1 During this most recent roll period for the Global X Covered Call ETF suite, the fear gauge established a new 52-week low. Meanwhile, the Nasdaq 100 touched a new high for 2023. Easing sentiment was supported by economic data suggesting that inflationary headwinds were beginning to subside, like a March Consumer Price Index (CPI) that declined 1% sequentially, to 5%.2 Retail sales also fell at a similar clip, and declining existing home sales denoted softer consumer spending.3,4
With investors largely anticipating the Federal Reserve’s (Fed) most recent decision to raise interest rates another 25 basis points, and corporate earnings reflecting positive performances so far for Q1, rangebound volatility may remain the narrative in the near term. That said, recessionary fears are still ever present, as persistent inflation and the Fed’s rate-hiking policy weighs on the jobs market and domestic manufacturing capabilities.
1As a general guideline, the monthly distribution of QYLD, XYLD, RYLD, DJIA, QYLE & XYLE 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.
For performance data current to the most recent month- or quarter-end or a copy of the Fund prospectus, please visit QYLD, QYLE, XYLD, XYLE, DJIA, RYLD, QYLG, XYLG, RYLG, TYLG, HYLG, FYLG.
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. QYLE, 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 five times while XYLE has only rolled its options portfolio two 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:
- The Case for a Systematic Options Rolling Plan
- Covered Call Strategies, Explained
- Risk Management Strategies for a Volatile Market Environment
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
QYLE – Global X Nasdaq 100 ESG Covered Call ETF
XYLE – Global X S&P 500 ESG Covered Call ETF
Click the fund name above to view current holdings. Holdings are subject to change. Current and future holdings are subject to risk.