Passive Strategies For Sideways Markets

Passive Strategies For Sideways Markets

With summer approaching, it is time to expect nothing from markets. Article originally published at Master Investor Magazine August 2020 Issue 65.

At a time of light trading, a covered call strategy may be useful for generating profits in a flat market, providing higher returns with lower risk than the underlying investment without the option part would provide.

With a traditionally light trading month on the horizon and US markets having already recovered from the virus sell-off, investors are looking for clues to choose a direction, which most likely won’t come soon. Markets will likely move sideways during the next month or two. In anticipation, what we really need is to unfold a sideways strategy with an eye on downside protection. One just never knows…

For those looking for an off-the-shelf solution, there are many covered call ETFs in the market. They do the hard work for investors.

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