First Trust Small Cap Growth AlphaDEX Fund (FYC) Covered Calls

The First Trust Small Cap Growth AlphaDEX Fund is an exchange-traded fund that tracks the NASDAQ AlphaDEX Small Cap Growth Index. The fund utilizes a proprietary, rules-based methodology to select and weight small-cap stocks from the NASDAQ US 700 Small Cap Index. By ranking securities on both growth and value factors, the fund aims to identify companies with the potential to generate positive alpha relative to traditional benchmarks.

You can sell covered calls on First Trust Small Cap Growth 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 FYC (prices last updated Mon 4:16 PM ET):

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The First Trust Small Cap Growth AlphaDEX Fund (FYC) provides investors with a factor-based approach to the small-cap segment of the U.S. equity market. Unlike traditional funds that weight companies by market capitalization, FYC employs the AlphaDEX selection methodology. This process ranks eligible stocks from the NASDAQ US 700 Small Cap Index based on growth factors—such as price appreciation, sales to price, and sales growth—as well as value factors like book value to price and cash flow to price. The highest-ranked stocks are then selected and weighted into quintiles, with the top-scoring companies receiving the largest allocations.

The fund typically invests at least 90% of its assets in the common stocks that comprise its underlying index. This quantitative "enhanced" indexing strategy is designed to exploit market inefficiencies by favoring stocks with strong momentum and fundamental characteristics while avoiding the concentration risks inherent in cap-weighted indices. The portfolio is reconstituted and rebalanced quarterly, which may lead to higher turnover but ensures the fund stays aligned with its growth and value objectives in the volatile small-cap space.

Competition

The small-cap growth arena is highly competitive, with several liquid and optionable ETFs available for investors. FYC’s primary rivals include the iShares Russell 2000 Growth ETF, which is the industry benchmark for the segment, and the Vanguard Small-Cap Growth ETF. Other notable competitors with active options chains include the iShares Russell 2000 ETF for broad small-cap exposure and the Schwab US Small-Cap ETF, which focuses on low-cost access to the broader small-cap market.

Strategic Outlook and Innovation

The strategic focus of the fund is to provide "smart beta" exposure that can potentially outperform the broader small-cap market through disciplined factor rotation. By integrating both growth and value metrics, the fund seeks to capture companies at an inflection point where fundamental strength meets price momentum. This dual-factor approach is intended to provide a more resilient return profile during various market cycles, particularly when traditional "pure growth" strategies may face headwinds from rising interest rates or economic slowing.

Innovation at the fund level is driven by the proprietary AlphaDEX engine, which continuously refines how stocks are categorized and weighted based on historical and predictive data. The management team at First Trust focuses on maintaining high transparency and tax efficiency within the ETF structure, even with the higher turnover required by the quarterly rebalancing process. As institutional interest in multi-factor investing grows, the fund aims to remain a primary tool for investors seeking a quantitative edge in the high-reward, high-volatility world of small-cap equities.

Want more examples? FXZ Covered Calls | FYLD Covered Calls