This is not a recommendation to buy or sell any security. I am not a financial advisor or tax advisor. To clarify how covered call ETF works, a covered call sells a strike price above market price, usually 5-10%. So if underlying shoots up 15%, the ETF will cap upside profit to only the 10%. But all the downside risk is there, meaning if underlying goes to zero, then ETF synthetic position goes to zero too. Usually, though, in the case of upside profits, the manager of the ETF will “roll” or buy to cover the ITM covered call and sell another higher call further out to try to capture up to the 15% gain, in that example.

In general, don’t just buy the highest yields, because the underlying could be bearish. For me, I look for income ETFs where the underlying is bullish in the long term.

I’d be happy to answer any other questions. Thanks for reading!

Kind regards,
Ryan