How They Generate Income
The ETF holds stocks and sells call options on a portion of those holdings. The option premiums create extra cash flow on top of any stock dividends.
Key Trade-offs
| Pros | Cons |
|---|---|
| Monthly cash flow potential | Upside can be capped in strong rallies |
| Can feel smoother in flat/volatile markets | Payouts vary month to month |
| No options experience needed | Usually higher fees than plain index ETFs |
Where ZWB Fits
ZWB focuses on Canadian banks and layers a covered-call overlay. That concentrates sector risk (banks) in exchange for steady monthly distributions.
Further learning: Covered-call ETF basics (Fidelity)