iShares Investment Grade Corporate Bond BuyWrite Strategy ETF(CBOE:LQDW)

LQDW is one of the first bond ETFs to utilize a buy-write strategy. The fund holds shares of the iShares iBoxx USD Investment Grade Corporate Bond ETF (ticker: LQD) and sells one-month covered call options. The objective is to provide additional income, in the form of option premium, along with the distributions from the underlying bond portfolio. The fund writes call options up to the full amount of the shares held in the portfolio. In doing so, the fund takes in option premiums but forgoes the upside potential on the bonds at the strike price. The fund uses European-style options, which means the call options can only be exercised on the expiration date. The fund's strategy may outperform in periods of rising rates and widening credit spreads. In periods of declining rates, however, the fund will likely underperform as compared to funds only holding investment grade bonds.