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ETF savings plans close to ATH, few shares for a lot of money - does a covered call make sense?

I am currently considering whether it might make sense to transfer my savings rate to the $VWRL (-0.45%) and $EQQQ (-0.59%) for a while and divert capital into a covered call ETF instead.

This could be the $JEGP (-0.16%) for example, but others could also be considered.

The idea would be:

In the current market phase, you could generate additional income through the regular distributions of a cc ETF and reinvest it in a targeted manner.

Should there be a significant correction, my plan would be to sell the cc ETF and reinvest the capital in my standard ETFs $VWRL (-0.45%) and$EQQQ (-0.59%) and

I would be interested in your opinion:

I see the following risks: lost capital gains, the tax aspects and the timing risk. Are there any other risks?

Is there a more attractive alternative to the $JEGP (-0.16%) ?

Do you think that this approach could actually have advantages over a blind buy & hold world ETF in a sideways phase?

I look forward to your opinions and comments 🤓

14 Comments

Patrick Schäfer@Hotte1909

I'm right there with you. The problem is who knows exactly when the sideways movement begins and ends 😉 I myself have $JEPQ in my portfolio as an addition. It does what it's supposed to do - bring regular dividends 😉

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TotallyLost@TotallyLost

Nope, I don't think it's such a good idea because it's neither meat nor fish.

IF you think that valuations are too high but you are looking for an instrument to profit from falling prices, then I would recommend either cash (with TR you can also get it at interest) or 10+ year government bonds from countries with AAA or AA credit ratings.

If you don't want to deal with bonds (understandable, it's boring) then just hold cash.
The CC ETFs fall just as much in a crash as the "normal" ETFs, so they have little to no diversification effect. 😘

Alternatively, take a look at this, which also deals with investment reserves, among other things.
https://getqu.in/wtMaho/

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Kate🦋@Iwamoto

@TotallyLost Be honest, you are Gerd Kommers son 🤓

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TotallyLost@TotallyLost

@Iwamoto you're so close, but it's actually like this....
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I AM GERD KOMMERS FATHER 😂

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user5ca946a11b6a4278@user5ca946a11b6a4278

So I celebrate the $YMAG (I think I linked it incorrectly, I mean the yieldmax bigtech). Only an admixture, of course. And the returns are put directly into e.g. the $TDIV and or individual stocks and Bitcoin.

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Solitair@Solitair

In the event of a correction, the covered call will probably fall just as sharply as a standard ETF. Until then, you can of course pick up a few distributions.

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Imvestment4Life@Investment4Life

Fixed less return in the long term
Can bring more or less return.
Rather less ...

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FullSelfDrivingLastenalpakaverleih@DoppelSchlechtMinus

In the bear market of 2022, for example, an addition of the American JPM Income ETF to the S&P 500 brought a lot, and even more so to a NASDAQ-100.

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Imvestment4Life@Investment4Life

@DoppelSchlechtMinus
Only you don't invest for a year.
Unfortunately, things have been different since 2022!

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FullSelfDrivingLastenalpakaverleih@DoppelSchlechtMinus

@Investment4Life You can't generalize for how long "one" invests. I wouldn't include something like that in a decades-long buy & hold strategy either. But that's not what this article was about.

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QUANTIJS@QUANTIJS

QDVO and IDVO (through options from EU)

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Johnny B.@JBatelli

I also think $WINC is very good. It has been around since March 2024 and is very close to the MSCI World. The difference since inception (17 months) to the MSCI World is only 0.75% according to JustETF.

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Gehebeltes-EFH@Gehebeltes-EFH

Nein.

https://www.youtube.com/watch?v=YMLVdY8y8vM

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Chandra@Chandra

I do the same. If I think the valuation is too high, then I order the $JEPQ and then switch in the event of a crash. However, I plan to switch to $QQQ3 and not to $EQQQ 😄

The problem is that I was actually planning to do the same in April, but only shifted very little because I assumed that it would fall even further.
My conclusion from this is that you need a concrete plan for when to reallocate, otherwise you're waiting for prices to fall lower and lower. But how?
-10% from the ATH -> reallocate 25%?
And for every additional 5%, always reallocate 25%? So at -25% of the ATH, everything shifted? What do you think?

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