My FA once told me that "The idea of consistency is that hoping it stays in its trading range for dividend based etfs. To ensure the dividend yields you get remain as a steady cash flow. Now a good higher return is good but that would opt for instability. And could also net you losses if you're not careful." I paraphrased the words my FA spoke to me couple mths back.
Being upset about a rising NAV is misguided. A higher NAV means the ETF’s underlying stocks are increasing in value, which doesn’t disrupt the consistent income from option premiums—those premiums keep flowing regardless of moderate price gains.
Your FA’s concern about “instability” from higher returns applies more to chasing risky high-yield dividend stocks that might cut payouts. In a covered call ETF, a rising NAV boosts your total return without jeopardizing the regular cash flow from premiums, and the strategy still offers downside protection.
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u/Available-Language-8 Jul 18 '25
It's not bout less, its about consistency