Trade Of The Week: SPY

Options Portfolio Manager – Investors Alley • Aug 8, 2022 at 2:36 PM EDT

Using covered calls on index ETFs is a popular way to produce additional cash flow from holding stocks.

Using covered calls on index ETFs is a popular way to produce additional cash flow from holding stocks. For instance, the SPDR S&P 500 ETF (SPY) is not only the most heavily traded ETF in the world, but it’s also commonly used for covered call trades. A large block of covered calls seemingly traded last week, which theoretically allows the trader to collect a large amount of cash from selling options while also being eligible to get the next dividend payment in the stock.

To watch the video, click here. (Running length 00:05:34)

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