Amplify ETFs has launched a new options-based cybersecurity ETF to meet the needs of investors wanting monthly income from a sector more associated with growth than income generation.
• What’s driving HAKY shares up?
The new fund, referred to as the Amplify HACK Cybersecurity Covered Call ETF (NYSE:HAKY), will be comprised of shares of the Amplify Cybersecurity ETF (NYSE:HACK) and call options on the ETF, generating income from the premiums of the call options. The ETF seeks a 15% or more annualized option premium income and a monthly distribution.
This is in contrast to traditional income funds based on dividends, bonds, etc., which HAKY’s strategy seeks to benefit from with its covered call strategy, which performs better in volatile conditions, sacrificing some growth in the event of a strong equity market run. It claims to offer an income stream with partial upside participation in the potential gains of cybersecurity equities.
The move comes as the cybersecurity expenditure continues to grow, driven by mounting digital risks, stricter regulatory demands and the adoption of artificial intelligence solutions within organizations.
Projected figures by Cybersecurity Ventures indicate the cybersecurity industry will be valued at over $1 trillion by 2031, a clear indicator of the growing investments in the sector over the years.
HAKY is the latest addition to Amplify's suite of YieldSmart ETFs, which are options-based ETFs that integrate yield with exposure to publicly traded equities. The ETF has an expense ratio of 0.65%.
Though such covered call strategies may prove useful in providing support to returns during volatile market conditions, when equities soar, these strategies might not perform as well, making HAKY more appropriate for an income-oriented rather than an appreciation-oriented investor.
