KODEX US S&P500 Volatility Expansion Covered Call ETF Listed

The world's first conditional covered call ETF based on volatility management has been launched.

Samsung Asset Management announced on August 11 that it will list the KODEX US S&P500 Volatility Expansion Covered Call ETF, which implements smart volatility management according to market phases and is advantageous for long-term investment, on August 12.

The KODEX US S&P500 Volatility Expansion Covered Call ETF directly tracks the S&P500, the representative index of the United States known for long-term investment, but only executes a daily covered call strategy during periods of heightened volatility to collect option premiums. Under normal circumstances, the ETF does not employ a covered call strategy and tracks the S&P500 index 100%. Only when specific conditions of increased volatility are met does it strategically sell call options on a daily basis.

The standard for identifying periods of heightened volatility is the Volatility Index (VIX), commonly referred to as the "fear index." When the VIX exceeds its 20-day moving average and there is a backwardation in the VIX futures market (where short-term volatility is higher than long-term volatility), the ETF increases the proportion of call option selling. When the market's fear index rises and near-term investor sentiment is more subdued than long-term sentiment, the covered call strategy is executed. If there are no signals of increased volatility, the proportion of call option selling remains at 0%.

Generally, option premiums tend to rise in periods of increased volatility. By flexibly executing the covered call strategy only during such periods and collecting option premiums, investors can expect a long-term cumulative effect.

The KODEX US S&P500 Volatility Expansion Covered Call ETF is a monthly dividend ETF that allows investors to benefit from both capital gains and dividend income. It pays out monthly dividends based on a comprehensive assessment of stock dividends from S&P500 constituents and the option premiums collected each quarter, reflecting outperformance relative to the index. Up to 70% of defined contribution and individual retirement pension (DC·IRP) assets, and up to 100% of personal pension assets, can be invested in this ETF.

Song Ahyun, a manager at Samsung Asset Management, stated, "There are still factors that could increase volatility in the US stock market, such as policy and geopolitical risks," and added, "We recommend smart long-term investment with the KODEX US S&P500 Volatility Expansion Covered Call ETF, which turns even potential volatility into opportunity."

He further commented, "Just as we have introduced the world's first conditional covered call ETF that leverages volatility as an opportunity, we will continue to strive to launch a variety of products to support smart long-term investment for investors."

This content was produced with the assistance of AI translation services.