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The Best Buy-Write Closed-End Funds

December 19, 2011 – Comments (0) | RELATED TICKERS: NFJ , EVT

One of the more popular income strategies is to use a buy-write option strategy to sell option premiums for income. This is simply owning 100 or more shares of stock, and selling a one covered call option per 100 shares of stock. While many investors use this strategy in their portfolios, others invest in closed-end funds that use this strategy and distribute the proceeds to shareholders. This is a great strategy in specific type of markets, such as sideway movements in the general stock markets. The biggest myth to this strategy is that covered call writing does not work and the CEFs are only returning the investors' capital disguised as distributions. This is incorrect, as return of capital by CEFs is based on accounting definitions when using option strategies like covered call trades.

Get full list of buy-write funds.