First Trust Small Cap Value AlphaDEX Fund (FYT) Covered Calls

First Trust Small Cap Value AlphaDEX Fund is an exchange-traded fund that tracks the Nasdaq AlphaDEX Small Cap Value Index. The fund utilizes a proprietary selection methodology to identify small-cap stocks with strong value characteristics and potential for risk-adjusted outperformance. By screening the Nasdaq US 700 Small Cap Index for specific fundamental factors, the ETF aims to provide an "enhanced" alternative to traditional market-cap weighting.

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

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The First Trust Small Cap Value AlphaDEX Fund (FYT) is a "Smart Beta" investment vehicle that applies a quant-driven, rules-based approach to the volatile small-cap equity market. Unlike traditional index funds that weight companies by their total market value, FYT uses the AlphaDEX selection methodology. This system ranks stocks based on fundamental growth and value factors, aiming to filter out underperformers and overweight those with the highest potential for "alpha"—or market-beating returns.

Core Business and Products

The fund’s primary product is a portfolio of approximately 260 small-cap U.S. stocks. The selection process begins with the Nasdaq US 700 Small Cap Index, which is then narrowed down by evaluating each stock against three value factors (book value to price, cash flow to price, and return on assets) and three growth factors. The top-ranked stocks are placed into "quintiles," with the highest-ranked quintiles receiving a greater weight in the portfolio. As of early 2026, the fund has a significant tilt toward the Financials, Energy, and Consumer Discretionary sectors, reflecting the cyclical nature of the current small-cap value environment.

Competitive Landscape

FYT competes in the crowded small-cap value space, where its high-conviction, factor-based approach differentiates it from passive benchmarks. Key competitors include:

1. iShares S&P Small-Cap 600 Value ETF: A standard benchmark for the category. FYT differentiates by using its multi-factor ranking system to weight stocks, whereas this rival uses a more traditional market-cap-weighted approach restricted to the S&P 600 universe.
2. Vanguard Small-Cap Value ETF: One of the largest and cheapest funds in the sector. FYT sets itself apart by being more "active" in its rebalancing, seeking to exploit short-term valuation anomalies that this broad-market rival might ignore.
3. Avantis U.S. Small Cap Value ETF: An actively managed competitor. FYT distinguishes itself through its purely rules-based, transparent AlphaDEX index, which provides a systematic alternative to the human-led discretionary decisions of this rival.
4. iShares Russell 2000 ETF: The core small-cap proxy. FYT differentiates by its strict value-only focus, intentionally excluding the high-priced growth stocks and unprofitable tech firms that often dominate this broader benchmark.

Strategic Outlook and Innovation

The strategic outlook for FYT is increasingly positive as the 2026 market environment favors "reflationary" assets. Small-cap value stocks typically thrive when the yield curve steepens and domestic economic growth remains resilient. Innovation within the fund is centered on its quarterly rebalancing cycle, which allows it to rotate out of stocks that have become "too expensive" and into fresh value opportunities more frequently than standard semi-annual indices.

Future growth is driven by investors seeking higher risk-adjusted returns than what is offered by the S&P 500. With an expense ratio of 0.70%, FYT is priced as a "premium" indexing tool for those who believe that fundamental weighting can outperform market-cap weighting over a full market cycle. By focusing on high-conviction value rankings, the fund aims to capture the "small-cap premium" while mitigating the risks associated with the lower-quality stocks typically found in the bottom tier of the Russell 2000.

Want more examples? FYLD Covered Calls | FYX Covered Calls