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Covered Call Funds
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BuyWriteThere is a type of fund on the NYSE which buys shares in the S&P 500 index and then writes covered calls to supplement it. Just started in December. It's called Powershares S&P 500 BuyWrite portfolio (PBP). Buy-Write - A trade where the investor buys stock and simultaneously sells a call against it. It is a covered-call position. The strategy consists of holding a portfolio indexed to the S&P 500 and selling a succession of written options, each with an exercise price at or above the prevailing price level.Dividends paid on the component stocks underlying the S&P 500 and the dollar value of option premiums received from written options are reinvested. Top Holdings: Exxon Mobil Corp. 3.90% General Electric Co. 2.95% AT&T Inc. 1.96% Microsoft Corp. 1.95% Procter & Gamble Co. 1.74% Bank of America Corp. 1.61% Johnson & Johnson 1.52% Chevron Corp. 1.45% Pfizer Inc. 1.30% Altria Group Inc. 1.28% |
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