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Buy-Write ETF (PBP) Hits New 52-Week High

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For investors seeking momentum, Invesco S&P 500 BuyWrite ETF (PBP - Free Report) is probably on radar. The fund just hit a 52-week high and is up 24.8% from its 52-week low price of $17.62/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

PBP in Focus

This fund seeks to track the CBOE S&P 500 BuyWrite Index, which employs the hypothetical buy-write strategy on the S&P 500 Index. This strategy includes holding a long position in the stocks on the S&P 500 and selling a succession of covered call options, each with an exercise price at or above the prevailing price level of the S&P 500 Index. The fund charges 49 bps in annual fees (see: all the Large Cap Blend ETFs here).

Why the Move?

This corner of the broad U.S. stock market has been an area to watch lately given the volatility. While the rapid pace of vaccinations and huge stimulus program is injecting optimism over economic growth, investors are turning jittery due to a spike in inflation, which could trigger earlier-than-expected tightening by the Fed. Against such a backdrop, investors are looking for capital appreciation opportunities in the equity world with simultaneous downside protection, making the ‘Buy-Write’ strategy a compelling option for now.

More Gains Ahead?

It seems that PBP might remain strong given a high weighted alpha of 22 and a low 20-day volatility of 11.11%. As a result, there is definitely still some promise for investors who want to ride on this surging ETF a little further.

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