OCBC launches global dividend fund which sells covered call options.
OCBC fund offers 6%-8% payout…
He said GHPF was able to generate average returns of 8% by adopting the two-pronged “buy� and “write� strategy.
Many unit trust funds, he said, purchased equities for growth and dividends.
“GHPF invests in global high dividend stocks and sells covered call options on underlying stocks for a premium to generate additional income,� he told StarBiz in an interview.
A call option gives the right to buy an underlying stock at a specific price in the future. Selling or writing call options allows a seller to earn option premium income upfront.
If the underlying stock rises above the exercise price, the call option buyer can exercise the option for a profit. Otherwise, the option will expire worthless and the option seller earns the premium.
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