Global X has launched an ETF implementing a covered call strategy tied to the Russell 2000 Index, which measures the performance of small cap stocks. The Global X Russell 2000 Covered Call ETF (RYLD) tracks the Cboe Russell 2000 BuyWrite Index.
RYLD comes with an expense ratio of 0.60% and lists on Cboe Global Markets, parent company of ETF.com.
The fund’s underlying index tracks a strategy that holds the stocks of the Russell 2000 Index while selling call options on the small cap index on a monthly basis. This type of strategy offers downside protection and limits upside performance, while allowing the fund to benefit from the income generated by selling the call options.
There are several covered call strategies available in an ETF wrapper. In fact, Global X offers the Global X S&P 500 Covered Call ETF (HSPX), which launched in 2013 and currently has nearly $100 million in assets.
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