The Hong Kong Stock Exchange (HKEX) has seen its first-ever listings of covered call ETFs, according to a media release.
A covered call is a strategy where an investor sells call options on an asset they already own, generating income in the form of a premium. This allows investors to benefit from potential asset appreciation up to the strike price, and during times of volatility, the options premiums can provide downside protection to investors, the media release said.
Wanyoun Cho, chief executive officer (CEO) of Mirae Asset Global Investments (Hong Kong), said in another media release: “[A] covered call strategy provides a relatively stable income for investors, especially during rangebound scenarios. Global X ETFs is proud to pioneer the first covered call ETFs in Hong Kong, offering investors a unique opportunity to increase income potential and enhance downside protection.”
Exchange Traded Products (ETPs), including ETFs and leveraged and inverse products (L&I products), are one of the fastest-growing segments in HKEX’s markets, the HKEX release said. Average daily turnover in the ETP market reached an all-time high of HK$14 billion ($1.79 billion) in 2023, up 17% from a year earlier.
Roberts added: “This type of strategy typically requires a level of expertise and involves active trading. However, an ETF that incorporates a covered call strategy can help investors save time, generate passive income, and remove the complexity of managing downside risks on their own. We look forward to welcoming more of these and other ETFs to our markets in the coming months ahead.”
Last November, Hong Kong saw the first Saudi Arabian ETF in Asia Pacific, which was also the world’s largest Saudi ETF with over HK$8 billion in asset under management (AUM).
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