Palantir's Record Earnings Draw Attention to 'SOL Palantir Covered Call ETF'

Top 1 and 2 Annual Dividend Yields Among Korean Covered Call ETFs

U.S. artificial intelligence (AI) software company Palantir Technologies (PLTR) announced second-quarter results that far exceeded market expectations. Amid this upbeat news, two ETFs in Shinhan Asset Management's 'SOL Palantir Covered Call ETF Series' are drawing significant interest from investors.

According to Shinhan Asset Management on August 7, this series employs a covered call strategy in combination with investment in Palantir, one of the global leaders in AI. The structure allows investors to participate in a portion of Palantir’s stock price gains while seeking monthly income by utilizing option premiums.

The 'SOL Palantir Covered Call OTM Bond Mix' ETF invests 30% of its assets in a covered call strategy using Palantir shares and out-of-the-money (OTM) weekly call options with a strike price set at 103% of Palantir’s current stock price, with the remaining 70% allocated to short-term U.S. Treasury bonds and similar instruments. If Palantir's stock price rises by up to 3% within a week, the ETF participates in the gain through the covered call strategy and also secures option premiums. However, if Palantir’s stock price surges more than 3% in a short period, the potential for additional upside in the covered call portion becomes limited due to the sold call option position.

The 'SOL Palantir US Treasury Covered Call Mix' ETF allocates up to 30% to Palantir shares and the remaining 70% to a weekly covered call strategy based on long-term U.S. Treasury bonds. This ETF seeks to combine participation in Palantir’s gains with relatively stable monthly income generated from U.S. Treasury bond interest and option premiums.

As of August 6, the annual dividend yield stood at 28.16% for the 'SOL Palantir Covered Call OTM Bond Mix' and 24.20% for the 'SOL Palantir US Treasury Covered Call Mix.' These ranked first and second out of 62 covered call ETFs available in the Korean market.

Gideok Kim, Head of Quantitative Strategy at Shinhan Asset Management, remarked, "The fact that Palantir’s stock price soared by nearly 30% in a single day immediately after the earnings announcement indicates that strong growth expectations have been reflected in the market." He added, "However, given the high volatility characteristic of single stocks, covered call strategies, which pursue both monthly income and volatility-buffering through option premiums while still participating in potential gains, could become more valuable tools for investors."

He continued, "When investing in companies like Palantir, which exhibit both high growth potential and high volatility, it is important to select an investment strategy that aligns with your investment objectives and risk preferences, rather than simply predicting the direction of the stock price."

This content was produced with the assistance of AI translation services.