First Trust Energy AlphaDEX Fund (FXN) Covered Calls

The First Trust Energy AlphaDEX Fund (FXN) is an exchange-traded fund that seeks to track the performance of the StrataQuant Energy Index. The fund utilizes the AlphaDEX stock selection methodology to select energy sector stocks from the Russell 1000 Index based on growth and value factors. By employing a tiered equal-weighting system, FXN aims to provide a more balanced and potentially higher-performing exposure to the U.S. energy market compared to market-cap-weighted indices.

You can sell covered calls on First Trust Energy AlphaDEX Fund to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for FXN (prices last updated Fri 4:16 PM ET):

Want to make money with covered calls?  Sign Up For A Free Trial

The First Trust Energy AlphaDEX Fund (FXN) is an enhanced sector ETF that tracks the StrataQuant Energy Index. Unlike traditional energy funds that weight holdings by market capitalization, FXN utilizes the proprietary AlphaDEX selection methodology. This quantitative process ranks stocks from the Russell 1000 Index based on a combination of growth factors—such as price appreciation and sales growth—and value factors like cash flow to price and return on assets. This results in a portfolio that tilts toward companies with strong fundamental momentum and attractive valuations.

The fund employs a tiered equal-weighting structure, which reduces the influence of the largest oil majors and provides greater exposure to mid-cap and high-growth energy firms. The index is rebalanced and reconstituted quarterly, allowing the fund to dynamically adjust to changing market conditions and fundamental shifts within the energy sector. This methodology is designed to objectively identify stocks that may generate positive alpha relative to passive benchmarks, making FXN a tactical tool for investors seeking active-like returns within an ETF structure.

Competitive Landscape

FXN competes within the broad U.S. energy ETF space, primarily against massive, market-cap-weighted products. Its most notable rival is the Energy Select Sector SPDR Fund, which is dominated by a few integrated oil giants. Another major competitor is the Vanguard Energy ETF. While these peers offer lower expense ratios, FXN’s AlphaDEX strategy appeals to investors who believe a quantitative, factor-based approach can outperform standard indexing over the long term.

The fund’s holdings include a diverse range of companies across the energy value chain, from exploration and production to equipment and services. Key constituents often include independent producers like Devon Energy Corporation and Diamondback Energy, Inc.. The portfolio also features major integrated players like Exxon Mobil Corporation and ConocoPhillips, alongside service providers such as SLB (formerly Schlumberger). All of these companies are listed on major US exchanges and support liquid options markets.

Strategic Outlook and Innovation

The strategic appeal of FXN is rooted in its ability to adapt to the cyclical nature of the energy market. By utilizing multi-factor screening, the fund can rotate into specific industries—such as oil equipment or refining—when those areas show superior fundamental trends. This adaptability is critical as the energy sector navigates the dual pressures of global demand growth and the long-term transition toward more efficient extraction technologies. The fund remains a key vehicle for investors who want a "smart" exposure that avoids the concentration risks inherent in traditional energy indices.

Innovation at First Trust involves the continuous refinement of the AlphaDEX methodology to ensure it remains effective in a modern trading environment. As the energy sector becomes increasingly influenced by data-driven drilling techniques and capital discipline, the fund’s focus on cash flow and return metrics helps identify companies that are truly creating shareholder value. This systematic, rules-based approach ensures that FXN stays aligned with the most productive and financially sound segments of the energy market, providing a disciplined path for growth-oriented energy investors.

Want more examples? FXL Covered Calls | FXO Covered Calls