KWEB - KLIP: Would Rather Own KWEB Directly
2024-06-12 16:41:31 ET
Summary
- Covered call strategies have gained popularity for yield and downside protection, but may not be suitable for investing in China.
- Kraneshares China Internet And Covered Call Strategy ETF aims to provide exposure to the Chinese internet sector while reducing volatility.
- The KLIP ETF writes call options on the KraneShares CSI China Internet ETF to earn income and mitigate losses, but limits upside potential.
Covered call strategies have been all the rage recently to juice yield and provide some downside protection. It’s worked to gain a ton of assets for funds focused on that strategy. A covered call strategy is a type of options trading that combines the purchase of an underlying asset (a call on shares of, say, Apple stock) with the sale (or writing) of (out-of-the-money) call options against those shares. The strategy provides an additional income stream from the premiums received when selling the call options. It is typically used when the asset is expected to remain relatively stable or to appreciate at a moderate pace. Profit is limited to the premium received plus any gains up to the strike price while, since the underlying asset has already been purchased. It also, of course, limits the upside as a result....
KLIP: Would Rather Own KWEB Directly