More Options on Covered Calls
Employing covered calls remains one of the most popular and basic options trading strategies, but also one of the most overused or misapplied.
Some newly launched funds can help individual investors introduce a slice of this conservative, but somewhat labor intensive, strategy into their long-term portfolio investment pie. (For a primer on covered calls, click
In July, the (MCN) Madison/Claymore Covered fund raised $260 million, and in August, (FFA) First Trust/Fiduciary Asset Management Covered Call fund raised $338 million. Unlike some existing mutual funds that use options, these two are closed-end funds, meaning they will not be accepting new investors or even new money from existing investors. But one can buy (and sell) stakes in their publicly traded shares.
Both funds are benchmarked to the Chicago Board Options Exchange's (CBOE) BXM Buy Write Index (BXM). Last year, I wrote about the CBOE licensing its BXM Index to be named as both a benchmark and replicated by money management firms in an attempt to bring
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