Global X Research TeamThe Global X Research Team is pleased to release the distribution and premium numbers for our covered call ETFs for March 2023, as well as the addition to the report of our 2 newest covered call ETFs; QYLE, the Global X Nasdaq 100 ESG Covered Call ETF and XYLE, the Global X S&P 500 ESG Covered Call ETF. Global X’s Covered Call suite of ETFs generally invest in the underlying securities of an index and sell call options on that index, an ETF tracking the underlying equity index, or a similar equity index. These strategies are designed to provide investors with an alternative source of income, while offering different sources of risks and returns to an income-oriented portfolio.
Click here to download the March 2023 Covered Call Report
Equity markets within the U.S. registered mixed results during the most recent roll period for call options utilized by the covered call suite. From 02/17/2023 to 03/16/2023, the S&P 500 and Nasdaq 100 indexes ascended 3.0% and 1.9% in value, respectively, while small-cap companies measured by the Russell 2000 saw negative sentiment and fell -9.0%.1 A prominent trend that influenced all these indices, however, was the rising levels of implied volatility that were brought about by instability across the regional banking sector. Indeed, the VIX and VXN rose to touch levels not seen since December and October of 2022, respectively, with the former advancing from 20.02 to 22.99 over the same period.2 This positively influenced the premiums that were retrieved by Global X Covered Call ETFs like XYLD and XYLG, which write calls on the S&P 500 Index. FYLG also modestly outperformed its underlying index despite meaningful declines across the financial sector.3
With inflation data and secular weakness in financials driving market performance over the past few weeks, the rate path taken by the Federal Reserve Board has remained in the spotlight. At its most recent meeting, the Federal Open Market Committee (“FOMC”) increased the discount rate by 25 basis points, to a range of 4.75%-5%. This seemed to be largely in line with market expectations, as indices that measure volatility largely took a step back in the aftermath. This may potentially lead to more mixed option premiums on the horizon in the coming quarters. That said, Q1 earnings season is right around the corner and a multitude of macroeconomic headwinds may continue to cast a veil over the corporate bottom line.
1As a general guideline, the monthly distribution of QYLD, XYLD, RYLD, DJIA, QYLE & XYLE is approximately capped at the lower of: a) half of premiums received, or b) 1% of net asset value (NAV). For QYLG, XYLG, RYLG, TYLG, HYLG, & FYLG, the monthly distribution is approximately capped at the lower of: a) half of premiums received, or b) 0.5% of net asset value (NAV). The excess amount of option premiums received, if applicable, is reinvested into the fund. Year-end distributions can exceed the general guideline due to capital gains that are paid out at the end of the year.
For performance data current to the most recent month- or quarter-end or a copy of the Fund prospectus, please visit QYLD, QYLE, XYLD, XYLE, DJIA, RYLD, QYLG, XYLG, RYLG, TYLG, HYLG, FYLG.
Fund Premiums and Implied Index Volatility
Disclaimer: Options Premiums vs. Implied Volatility graphs include implied volatility for the Nasdaq 100, S&P 500, Russell 2000, and Dow Jones Industrial Average Indexes. QYLE, QYLG, XYLG, and RYLG write covered calls on these same, aforementioned equity indices, thus, their premiums are not displayed here. TYLG, HYLG, and FYLG have only rolled their options portfolios four times while XYLE has only rolled its options portfolio one time, therefore Options Premiums vs. Implied Volatility graphs are currently not displayed for these ETFs and are expected to be added once more option premium data is received.
KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X
To learn more about our covered call options, read the latest research from Global X, including:
- Introducing the Nasdaq 100 ESG Covered Call ETF (QYLE) and S&P 500 ESG Covered Call ETF (XYLE)
- Covered Call Strategies, Explained
- RYLD: A Covered Call Strategy for Rising Rates
Related ETFs
QYLD – Global X Nasdaq 100 Covered Call ETF
XYLD – Global X S&P 500 Covered Call ETF
RYLD- Global X Russell 2000 Covered Call ETF
DJIA – Global X Dow 30 Covered Call ETF
QYLG – Global X Nasdaq 100 Covered Call & Growth ETF
XYLG – Global X S&P 500 Covered Call & Growth ETF
RYLG – Global X Russell 2000 Covered Call & Growth ETF
TYLG – Global X Information Technology Covered Call & Growth ETF
HYLG – Global X Health Care Covered Call & Growth ETF
FYLG – Global X Financials Covered Call & Growth ETF
QYLE – Global X Nasdaq 100 ESG Covered Call ETF
XYLE – Global X S&P 500 ESG Covered Call ETF
Click the fund name above to view current holdings. Holdings are subject to change. Current and future holdings are subject to risk.