Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it.

I'm your host David Stein. Today is episode 471.

It's titled, Unlocking Income, a Comprehensive Guide to Covered Call EDFs.

Few weeks ago in episode 467, I mentioned that the largest actively managed E.

T.F. in the US is the J.P. Morgan Equity Premium Income E.F. It has over $30 billion in assets and it took in close to

$13 billion just in 2023 alone. This E.T.F. invest in a strategy known as covered calls. It's also known as a by-right strategy.

There is a similar E.T.F. The Global X NASDAQ 100 covered call E.Tef.

Ticker is QYLD. It has over $8 billion in assets under management, a similar strategy to JEPI, the JP Morgan

Equity Premium Income EDF, recently had a member of money for the rest of us plus, our premium membership

community, post in the forum about strategies like this, where in this member's view the returns are potentially 12% because that's the yield on the GlobalX NASDAQ 100 covered call ETF

QYLD. Now there's a difference between the yield and the actual return. If we look at the

10-year annualized return for QYLD it's been 7.2% annualized and of the past three years it's returned 5% despite the very high yield.

It lost 19% in 2020 and this member was looking at these high-yielding EDFs and was asking well why not

invest in them if they could earn 12 to 15 percent per year with little downside.

Seems like a great investment.

Now, if we could find investments

with little downside that could earn 12 to 15% annualized, that. that would be a beautiful environment. But unfortunately it doesn't exist. Perhaps

for a short period of time but 10 years annualized double digit returns

with little downside risk don't exist. But covered call strategies can be an attractive addition to our portfolios.

So in this episode we want to look at what is a covered call strategy?

How does it work? What are the risks? Under what circumstances do they do well? And

when will they do poorly? A diversified covered call investment strategy like we're going to talk about today are also known as

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