Should You Invest in Covered Call ETFs?
In covered call ETFs, an investor gains profit by selling a call option on a particular asset on which he holds a long position.
Covered call ETFs have been on the rise over the recent years. They have gained massive attraction from investors seeking to customize and diversify their portfolio quickly as well as traders targeting specific industries, sectors, or countries.
The ability to target a specific sector means you don’t have to stick with a broader market index when you can exploit better opportunities and more choices that your preferred sector offers.
Since the buyer of your call option has to pay a certain premium before buying it and you keep that premium no matter what, you’ll make more money if the asset increase in value. And in an event the asset decline in value, you will mitigate loss since the premium will be used to offset the losses.
Considered a conservative investment approach, covered call EFTs are a great way of minimizing volatility and, at the same time, capturing some exposure to equity market gains.
With the downsize protection they offer when the market declines, the ability they provide to invest in specific sectors, and their opportunity for portfolio diversification—covered call ETFs are, therefore, worth investing in.
How Will the Airline Stock Recover Now that the Industry is at a Standstill?
Being one of the hardest-hit industries by the COVID-19, shares of airline companies have fallen over the last few months as investors leave for fear that it would take years before the industry recover. Even though the industry has faced several crises before, none can match the current situation. But how will stock recover?
One way to salvage the situation is by financially supporting the airline industry so that it doesn’t collapse. Bailout, which many governments have promised to offer to their respective airlines as part of the economic stabilization package, will help the industry stay afloat. However, little, the bailout will help the beneficiary airlines pay employees and carry out maintenance as they wait to resume normal operations.
Rather than wait for the disease to be fully contained before airlines resume operations, countries should ease (or lift) the travel bans while airlines change the business model to accommodate the pandemic. They may run flights with fewer passengers or space out seats to make passengers feel safe to travel again. That way, the industry can continue to operate hence avoid going out of business.
While it will take time before the airline industry recover, it should fight to stay afloat, waiting for the new normal for travel. That way, it can gain investors’ trust and aid in airline stock recovery.