Howard Chan, Founder and CEO of Kurv Investment Management, joined Keith Black, Managing Director of RIA Channel, to discuss income strategies for technology stock investors.
Kurv has a simple mission to level the investment landscape for all investors. Every member of the firm’s team has over twenty years of investment management experience at top firms such as PIMCO, Nuveen, JP Morgan, and Goldman Sachs. Over the course of their careers, they were able to learn the best practices that institutional and high-net-worth investors implement to meet their investment goals.
Covered call strategies are typically used by investors to generate income, especially when they view a specific stock as having limited upside return potential. A covered call strategy maintains a long exposure to an underlying stock while selling out-of-the-money call options to generate premium income.
Kurv makes strategies available to all investors in a simple ETF format. A covered call strategy can be time-consuming to manage, as trading and risk management tasks must be undertaken at or before options regularly expire. Kurv’s six covered call ETFs make over 200 trades per year. Implementing a covered call strategy in an ETF may be attractive to advisors and investors who would rather delegate these tasks.
Kurv offers six ETFs, each writing covered calls on a large-cap technology stock. Because technology stocks often generate little to no dividend income, investors may seek income in this sector by selling covered call options. Rather than implementing a generic or mechanical covered call strategy, Kurv implements a smarter covered call strategy that leverages the team’s experience in both the options and fixed-income markets.
While each investor has a different tax status, it is important to note that a portion of the distribution from the sale of options premiums may be categorized by the IRS as return of capital rather than as ordinary income. Long-term holders of the ETFs may potentially qualify for long-term capital gains tax treatment.
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FAQs on Covered Calls and ETFs
An investment in the fund involves risk, including possible loss of principal.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Kurv ETFs. To obtain a Fund’s prospectus and summary prospectus call 1-888-393-KURV (5878) or click on the ticker on this page to download. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Kurv ETFs are distributed by Foreside Financial Services, LLC. Foreside and Kurv Investments LLC are not related.
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