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Assessing High-Income Covered Call CEFs

As an income-focused investor, I'm a fan of covered call Closed End Funds (CEFs) and have written several articles on Seeking Alpha discussing their risks and rewards. For this article, I reviewed my previous analyses and selected ten of best-performing CEFs that delivered good returns at a reasonable risk (as measured by volatility). However, before I launch into the results of the analysis, I will provide a quick tutorial for the investors that may not be familiar with covered calls.

The basic idea of investing in covered calls is simple. An investor will buy a stock and write (that is sell) a call option against their stock position. Since the investor owns the stock, the position is termed "covered." The call option will give the buyer the right (but not the obligation) to purchase the stock at an agreed upon price (called the strike price) any time before the expiration… Read More …