2 Option Writing Funds Providing Attractive Distribution Yields

May 17, 2025 10:44 PM ET, , , 24 Comments
(9min)

Summary

  • Covered call writing closed-end funds can offer higher distributions through option premiums, but they can also limit some upside potential.
  • Some funds incorporate more flexible strategies to help negate some of that upside cap through overwriting only a portion of the fund.
  • We are looking at two call writing funds today that are both looking like attractive opportunities for long-term investors at this time, based on valuation.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »

Coins flying into a piggy bank

Richard Drury

Written by Nick Ackerman, co-produced by Stanford Chemist

Covered call writing closed-end funds can provide relatively higher distributions to their investors thanks to collecting the option premiums. Though there are two different ways a fund can write calls. That

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This article was written by

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Nick Ackerman is a former financial advisor using his experience to provide coverage on closed-end funds and exchange-traded funds. Nick has previously held Series 7 and Series 66 licenses and has been investing personally for over 14 years.

He contributes to the investing group CEF/ETF Income Laboratory along with leader Stanford Chemist, and Juan de la Hoz and Dividend Seeker. They help members benefit from income and arbitrage strategies in CEFs and ETFs by providing expert-level research. The service includes: managed portfolios targeting safe 8%+ yields, actionable income and arbitrage recommendations, in-depth analysis of CEFs and ETFs, and a friendly community of over a thousand members looking for the best income ideas. These are geared towards both active and passive investors. The vast majority of their holdings are also monthly-payers, which is great for faster compounding as well as smoothing income streams. Learn More.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of CII, QQQX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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