VanEck Semiconductor ETF (SMH) Covered Calls

The VanEck Semiconductor ETF (SMH) is an exchange-traded fund that seeks to replicate the price and yield performance of the MVIS US Listed Semiconductor 25 Index. The fund offers concentrated exposure to the 25 largest and most liquid U.S.-listed companies involved in semiconductor production and equipment. By targeting industry leaders across the entire chip value chain, it serves as a primary benchmark for the global semiconductor sector.

You can sell covered calls on VanEck Semiconductor ETF 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 SMH (prices last updated Fri 4:16 PM ET):

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

VanEck Semiconductor ETF (SMH) is the industry-leading vehicle for investors seeking concentrated exposure to the "brains" of the modern digital economy. The fund utilizes a market-cap-weighted strategy that emphasizes the largest players in the chip space, with a cap of 20% on any single constituent to maintain diversification. Its portfolio spans the entire semiconductor ecosystem, including designers of advanced GPUs, foundational foundries, and the manufacturers of complex lithography equipment.

In 2026, the fund's investment thesis is increasingly driven by the shift from AI training to large-scale AI inference workloads. With over 70% of its assets typically concentrated in its top ten holdings, SMH provides a high-conviction play on the structural growth of data centers, autonomous systems, and the continued electrification of the global vehicle fleet. The ETF's liquid options market and low expense ratio make it a preferred tool for both long-term core positioning and tactical hedging against tech sector volatility.

Competition

SMH competes in a crowded field of thematic technology funds. Its primary rival for institutional and retail assets is the iShares Semiconductor ETF, which tracks a broader index of 30 companies. For investors seeking a more cost-effective alternative, the Invesco PHLX Semiconductor ETF offers a similar exposure at a lower expense ratio.

The fund also faces competition from leveraged and inverse products used for short-term trading, such as the Direxion Daily Semiconductor Bull 3X Shares. Additionally, many investors choose to gain direct exposure through the ETF's largest components, most notably NVIDIA and Broadcom. While Skechers remains a well-known brand, it is entirely unrelated to the semiconductor industry and is not linked here. The fund must also navigate the rise of specialized sub-sector ETFs like the SPDR S&P Semiconductor ETF, which uses an equal-weighted approach.

Strategic Outlook

The roadmap for 2026 is defined by the massive capital expenditure cycle of hyperscale cloud providers, which is projected to exceed $500 billion globally. Management is positioning the fund to benefit from the "Inference Supercycle," where the deployment of AI across consumer applications is expected to drive sustained demand for high-bandwidth memory and advanced logic chips. By maintaining its focus on the most liquid industry leaders, the fund intends to capture the lion's share of institutional inflows as semiconductors move from a cyclical commodity to a structural utility.

Operational priorities are centered on ensuring the fund's tracking error remains minimal during periods of extreme market concentration. As the "CHIPS Act" incentives begin to materialize into domestic manufacturing capacity in late 2026, the firm expects its U.S.-listed focus to capture the resulting domestic growth. Management remains committed to providing the deepest liquidity in the semiconductor ETF space, supporting a robust ecosystem of secondary market products. These efforts are designed to ensure SMH remains the definitive "one-ticket" solution for participating in the ongoing transformation of global compute infrastructure.

Want more examples? SMG Covered Calls | SMHI Covered Calls