Exchange traded fund (ETF) provider PowerShares Capital Management is launching three new buy-write portfolio ETFs. The ETFs offer exposure to covered call strategies based on three indexes: The S&P 500, The Dow Jones Industrial Average (DJIA), and the Nasdaq 100. The new ETFs, which the company says, in its December 3 announcement, are the “first ETF portfolios covering major U.S. market indexes,” are slated to begin trading on Nasdaq and NYSE Arca on December 20.
“The portfolios are based on Chicago Board of Options Exchange (CBOE) BuyWrite indexes which, over the past decade, have had at least 25 percent less volatility than related stock indexes,” according to the Chicago-based company’s announcement. “This strategy is popular with asset managers, as it can provide additional income to a portfolio through call option premiums. These are the first ETFs that allow investors to capture the moving parts of a buy-write strategy, and they do it in one simple transaction,” Bruce Bond, PowerShares’ president and CEO, explains in the announcement.