WisdomTree CBOE S&P 500 PutWrite Strategy Fund

What could go wrong exactly? They are fully cash secured. This isn't more risky than owning SPY, albeit giving up almost all of the upside potential.

 

No need to guess, the index has data going back to 1986. In 2015 the index was up 6.4% vice the S&P up 1.4% (http://www.cboe.com/framed/pdfframe...E S&P 500 PutWrite Index (PUT) Fact Sheet )
From your comments I don't think the index works like you think it works; you may want to read up on it.

 

Ok, so a 'putwrite ETF' that doesn't write any puts?

 

I highly recommend reading the CBOE page on the subject. Essentially it writes fully collateralized puts, i.e. if the index was at 100 they would need $100 to write 1 put. Therefore the underlying index (S&P 500) would have to go to 0 for the putwrite index to go to $0. As Butterball pointed out, it's no more risky than owning the S&P 500 on the down side and you just trade the upside for a steady put sale income.

 

I believe VN was naked, I think this is collateralized.

 

PUTW is naked but fully collateralized.

 

Historically a put write ETF outperformas the relevant index with lower volatility.

Of course it will not outperform every year. In strong up years the index will perform better. But in the long term, it is an excellent way to get market similar or slightly better returns with lower volatility.

 

From Yahoo's ETF performance pages, it seems PUTW is outperformed by the SPY benchmark this year. It seems S&P Puts are at historically cheap level and there are not enough premiums to short...