Covered call exchange-traded funds (ETFs) attracted significant investor capital as Korean stock market volatility increased. RISE 200 high dividend covered call ATM ETF recorded a 13.75% return over the recent week, ranking first among domestic ETFs, according to KOSCOM's ETF Check data platform. The influx followed sharp declines in major semiconductor stocks, with Samsung Electronics falling 6.25% and SK Hynix dropping 5.68% during recent trading sessions.
RISE 200 Covered Call ETF Records 13.75% Weekly Return
RISE 200 high dividend covered call ATM ETF achieved a 13.75% return over the recent week. The product invests in high dividend stocks within the KOSPI 200 index while combining a covered call strategy. SOL Financial Holding Plus High Dividend ETF followed with a 7.01% return. KODEX Shareholder Return High Dividend Stock ETF recorded 6.34%, TIGER Bank High Dividend Plus TOP10 ETF gained 6.30%, and KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF returned 6.21%. PLUS High Dividend Stock Weekly Covered Call ETF posted a 5.50% return.
KOSPI Falls 5.35% as Semiconductor Stocks Decline
KOSPI closed at 7291.91, up 0.62% from the previous trading day. The index had fallen 5.35% in the prior session. Trading days before that recorded declines of 0.46% and 4.91%. Samsung Electronics dropped 6.25% and SK Hynix fell 5.68%, dampening overall market sentiment. Last month, KOSPI experienced daily volatility exceeding 4% on 11 out of 21 trading days, with three days showing movements above 8%. The KOSPI 200 Volatility Index (VKOSPI) reached 97.99 intraday on a date last month, marking the highest level since tracking began in 2009.
Covered Call ETFs Utilize Option Premium Strategy
Covered call ETFs hold stocks or indices while selling call options on those assets to secure option premiums. When stock prices rise sharply, additional gains may be limited. During sideways or mild downward markets, the strategy provides relatively stable returns through option premiums and dividends. Investor interest increased due to these characteristics amid expanded market volatility centered on the semiconductor sector.
Second and Third Generation Products Adjust Option Selling Ratios
Recently launched covered call ETFs address limitations of earlier products. First-generation products actively sold options, restricting returns during strong upward markets. Second and third-generation products utilize weekly options and adjust option selling ratios to increase participation in rising markets while distributing option premiums monthly. Park Woo-yeol, researcher at Shinhan Investment & Securities, stated that higher call selling ratios reduce upside participation in first-generation covered call ETFs. He noted that newly emerged second and third-generation covered call ETFs adjust weekly option usage and option selling ratios to enable performance gains during bull markets.
FAQ
What return did RISE 200 covered call ETF achieve over the recent week?
RISE 200 high dividend covered call ATM ETF recorded a 13.75% return over the recent week, ranking first among domestic ETFs according to KOSCOM's ETF Check data platform.
How much did Samsung Electronics and SK Hynix stocks fall during recent trading sessions?
Samsung Electronics fell 6.25% and SK Hynix dropped 5.68% during recent trading sessions, contributing to overall market volatility.
What level did the KOSPI 200 Volatility Index reach last month?
The KOSPI 200 Volatility Index (VKOSPI) reached 97.99 intraday on a date last month, marking the highest level since tracking began in 2009.
