PUTW - PUTW: Great For A Bull Run

2024-07-09 14:18:40 ET

Summary

• WisdomTree PutWrite Strategy Fund ETF sells put options on S&P 500 ETF to generate income beyond traditional sources.
• The PUTW fund's strategy involves selling cash-covered put options twice a month and investing premiums in US 3-Month Treasury Bills.
• While the fund has worked well in the current market cycle, potential risks include exposure to equity draw-downs and the complexities of options trading.

There’s been an explosion of interest lately in strategies that generate income and options overlay. Everyone wants more yield beyond traditional sources, and selling put options is one way to get that beyond standard coupons and dividends. There are numerous funds that do this, but one that’s been doing this for longer than most is the WisdomTree PutWrite Strategy Fund ETF (PUTW). This fund attempts to track the performance of the Volos US Large Cap Target 2.5% PutWrite Index. The idea here is to sell cash-covered put options on the SPDR® S&P 500 ETF Trust ( SPY ) twice a month at a strike price that is the higher of at-the-money exercise price, or at a 2.5% premium....

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