IRON Funds launches Equity Premium Income Fund (CALLX) A new mutual fund that strives to generate competitive option premium incomeRead More
The objective of the IRON Equity Premium Income Fund seeks to provide superior risk-adjusted total returns relative to the CBOE S&P 500® Buy-Write Index (BXMSM) by utilizing an actively managed options overlay strategy on the underlying exchange traded index fund.
Unique features of the Fund
- The Fund utilizes an exchange traded index fund to maintain the core equity exposure thus eliminating the need for holding individual stocks and associated single name risks.
- The Fund will write call options that are out-of-the-money, range from approximately 30 to 60 calendar days to expiration, and with less than 50 percent probability of being called away.
- The number of written call options may correspond to a fully covered underlying position thus avoiding margin and additional options’ leverage.
- The Fund does not utilize put options and hence maintains a true covered call structure.
Option writing may limit the amount of capital appreciation, especially in a rapidly rising stock market. The short-term return profile might be unattractive; hence this strategy is not suitable for shorter-term investment horizons. The Fund invests primarily in one or more underlying ETFs. Much of the Fund’s performance depends on the performance of the underlying ETFs, and an investment in the Fund is thus subject to the risks of the underlying ETFs. The Fund and its investors will also indirectly bear a portion of the fees and expenses of the underlying ETFs. These fees are in addition to the Fund’s direct fees and expenses, and may be considered duplicative. No strategy, including option strategies, can eliminate risk.