Collect on Covered Calls with NUSI

The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) is an income-focused exchange traded fund just right for these times because it doesn't rely on stocks or bonds to generate said income.

The Nationwide Risk-Managed Income ETF incorporates options exposure to help generate income and mitigate risk as a way to enhance total returns. Investors have long capitalized on covered call options strategies for income generation or protective put options strategies to protect against and limit losses.

NUSI YTD Performance

Covered call writing serves as one of the pillars of NUSI's income stream.

“This is a low-risk option-selling strategy where a security is purchased in 100 share increments and then call options are sold leveraging those securities,” according to Nasdaq. “Option sellers are undertaking the obligation to sell those shares at the strike price while option buyers hold the rights to exercise the options at any time during the contract (American-style options). In return for undertaking the obligation, covered call writers are paid a premium.”

Both Income and Covered Calls

NUSI incorporates both covered call and protective puts as a way to enhance income generation and protect against any potential downside.

A covered call refers to an options strategy where an investor writes or sells a call option on an asset which they already own or bought on a share-for-share basis to generate income via premiums derived from the sale of the call options. However, the covered call strategy caps upside potential and provides limited downside protection, so it is ideal for investors with a neutral-to-bullish outlook.

Covered call strategies such as NUSI can potentially augment a portfolio during periods of heightened volatility. The covered-call options allow an investor to hold a long position in an asset while simultaneously writing, or selling, call options on the same asset. However, the strategy isn’t free of risk.

NUSI is an actively managed portfolio of stocks included in the Nasdaq-100 Index and an options collar. Per index rules, the fund only invests in the top 100 largest by market cap, nonfinancial stocks listed on NASDAQ. A collar strategy involves selling or writing call options and buying put options, thus generating income to hedge some downside risk. The strategy seeks to generate high current income monthly from any dividends received from the underlying stock and the option premiums retained.

For more on income strategies, visit our Retirement Income Channel.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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