Covered Call ETF (XYLD) Hits New 52-Week High

For investors seeking momentum, Global X S&P 500 Covered Call ETF XYLD is probably on the radar. The fund just hit a 52-week high and has moved up 10.5% from its 52-week low of $37.93 per share. 

Are more gains in store for this ETF? Let us take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:

XYLD in Focus

Global X S&P 500 Covered Call ETF buys stocks in the S&P 500 Index and “writes” or “sells” corresponding call options on the same index. It tracks the Cboe S&P 500 BuyWrite Index, charging 60 bps in fees per year (see: all the Long-Short ETFs here).

Why the Move?

The covered-call strategy has been an area to watch lately as stock volatility surges after the best week of 2024. A covered call is an investment strategy to generate income and potentially hedge against downside risk. It involves buying a stock or a basket of stocks and then selling or writing call options on those same assets. These options give the buyer the right, but not the obligation, to purchase the stocks at a predetermined price before a specified date.

More Gains Ahead?

XYLD might remain strong, given weighted alpha of 7.68 and a lower 20-day volatility of 9.09%. There is definitely still some promise for investors who want to ride on this surging ETF.

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