- ETV is a CEF that owns a portfolio of overweight FAANG stocks and writes rolling 1-month covered calls for a premium.
- ETV pays a monthly dividend upwards of 8% from the option premiums received and capital gains on the underlying stocks.
- Unlike the fixed income market, the dividend is not guaranteed and can completely disappear if there is a protracted period of stock market weakness as we saw in 2018-2019.
- This strategy dampens downside losses by the net option premium but also caps upside moves.
- If you feel comfortable FAANG stocks are going to be stable or up-trending, ETV offers a more conservative approach to gain exposure to the basket and receive a substantial monthly dividend.
For further details see:
ETV: Transforming FAANG Stock Exposure Into Monthly Dividends