Covered Call ETF Faces Market Headwinds Amid Tech Concentration

The First Trust BuyWrite Income ETF (FTHI) employs a covered call strategy designed to generate consistent income for investors through option premiums. This approach involves maintaining a portfolio of U.S. stocks across various market capitalizations while simultaneously writing call options against the S&P 500 Index. However, current market conditions are testing the resilience of this income-focused methodology.

Recent performance data reveals a significant divergence between FTHI and broader market benchmarks. Year-to-date, the ETF has delivered a 6.24% return, while its one-year performance stands at 10.66%. These figures substantially trail the S&P 500’s gains of 14.8% and 17.6% over the same periods, respectively. This performance gap highlights the potential opportunity cost Read more...