How Do Covered Call ETFs Pay Such High Yields?

A simple explanation of covered call option strategy. Covered calls are used by individuals and funds to generate income from stocks and stock indexes. Today's video uses a simple example to walk you through how a covered call works and help you decide if its an income strategy you may want to explore further. Popular covered call ETFs include JEPI, JEPQ, and SPYI.

📊 RESEARCH TO BOOST YOUR RETURNS:

➡️ The REIT Forum (10% Discount Exclusive to Armchair Income Viewers):

✏️ LINKS FROM TODAY'S EPISODE:
Detailed Covered Call Option Explanation:

💰My Top 10 Favorite High Yield Investments (Playlist):
🤓 DETAILED INFORMATION:

✅ Seeking Alpha:
My #1 source of income investment information. I've been a subscriber for more than 6 years and my favorite feature is the collection of analysis articles for any given stock or fund.

✅ Interactive Brokers:
If you're not a US Citizen or Resident, you can still invest in US stocks and funds using Interactive Brokers. They also provide currency exchange and access to other stock exchanges around the world.
------------------------------------------------------
The information on this Youtube Channel and the resources available are for educational and informational purposes only and should not be construed as financial advice. Always do your own research before investing. Some links provided above may be associated with affiliate programs. If so, use of those links will not incur any additional cost to the user (and will, in many cases, provide a benefit to the user) and may result in a referral commission to this channel.

#armchairincome #seekingalpha #covered call #ad

[TheMally]

Thank you for the clear explanation on calls!

[rOHRshackartpottery]

At the age of 85 and fully retired I am living off my SS, dividends and annuity. One third of my dividend portfolio is devoted to SCHD, one third to dividend/growth stocks and the last third to call option ETFs. This last third to boost my monthly income for current expenses. I prefer the call option ETFs to have a total return at or above the index’s they represent. What is your opinion of investing in call option ETFs that fit that criteria?

[josephbscott]

Well explained information!
I just started trying selling 2 covered calls this month.
Rhe additional income potential is wonderful...
As long as one understands the risk vs. Rewards.

[Gandalf]

what set the price of the etf? how does the fund get money to buy the shares? what happens to the fund when they have to sell shares?

[garymcdonnell]

Solid information as always, and thanks! Now I can refer folks to this video so I don't have to stumble through explaining it myself.

[ivanh]

Can you do a video about MO. We all know that sales are declining, but why the short sellers are not shorting this stock? Do they know something we don’t?

[s.r.dworkin]

There is one risk with selling covered calls that I'd like to see discussed.. I own ACME at 100. I sell the 105. But, the CEO and CFO were found to defraud the SEC. Stock tanks to 11 in 2 days. Now I own ACME at 100. By the way, this is a real example from a well known IT company. Is the best answer to hedge with a long put at the time of the buy?

[eugeneforharmony]

Wonderful explanation how basic options work for those of us who do not trade them or do not have enough funds to own 100 shares. Link to other funds info is appreciated. So as far as I understand, the re is still a risk of the underlying index or stock going down but this is more or less is obvious. Thanks.

[normansimonsen]

This, increasingly, feels like an inflating bubble. What does the inevitable correction for it look like ?

[stangtrax]

So if his calls get called away for $115 and he wants to continue making income doing calls he would have to buy back the 100 shares at $115 taking a loss. Paying more for shares that get called away would eat into your retirement funds. Tell if that is wrong. Sounds like an important part of the conversation.

[overhansable]

You also get all the risk of holding the stock, aka it going to 0. Not really realistic when you do CCs on solid companies. But nevertheless a risk that should be talked about. Or people are gonna start selling CCs on GME after your video ;)