State Street Technology Select Sector SPDR ETF (XLK) Covered Calls

The Technology Select Sector SPDR Fund (XLK) is a primary investment vehicle for gaining exposure to the technology heavyweights of the S&P 500. It tracks the Technology Select Sector Index, providing concentrated access to industry leaders in software, hardware, and semiconductors. As one of the oldest and most liquid sector ETFs, XLK offers a low-cost, transparent way to invest in the U.S. technology sector, serving as a core growth building block for modern portfolios.

You can sell covered calls on State Street Technology Select Sector SPDR 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 XLK (prices last updated Fri 4:16 PM ET):

State Street Technology Select Sector SPDR ETF (XLK) Stock Quote
Last Change Bid Ask Volume P/E Market Cap
139.56 +0.35 139.44 139.58 26.6M - 104
Covered Calls For State Street Technology Select Sector SPDR ETF (XLK)
Expiration Strike Call Bid Net Debit Return
If Flat		 Annualized
Return If Flat
Feb 20 140 1.65 137.93 1.2% 54.8%
Mar 20 140 4.50 135.08 3.3% 33.5%
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Technology Select Sector SPDR Fund (XLK) is the industry-standard vehicle for targeted exposure to the largest technology companies in the United States. Issued by State Street Global Advisors, XLK is part of the Select Sector SPDR suite, which carves the S&P 500 into eleven distinct sector funds. By focusing exclusively on the "Information Technology" segment of the S&P 500, XLK provides a high-conviction, market-cap-weighted portfolio of established tech leaders with proven earnings power and global reach.

Core Strategy and Portfolio Composition

  1. S&P 500 Technology Focus: XLK’s universe is strictly limited to technology companies within the S&P 500. This ensures that the fund only holds large-cap, "blue-chip" technology firms that have met the rigorous profitability and liquidity requirements of the S&P Index Committee. Unlike broader tech ETFs, XLK excludes mid- and small-cap names, resulting in a more stable, large-cap-oriented growth profile.
  2. Sector Concentration: The fund is heavily concentrated in three primary sub-sectors: Software, Semiconductors & Semiconductor Equipment, and Technology Hardware, Storage & Peripherals. Because of its market-cap-weighting scheme, the portfolio is often dominated by the "Big Three" of tech—NVIDIA, Apple, and Microsoft—which together typically represent nearly 40% of the total assets.
  3. Cost and Liquidity: With a low expense ratio of 0.08%, XLK is one of the most cost-efficient ways to own a diversified tech basket. Its massive asset base and high daily trading volume ensure deep liquidity, making it an ideal tool for both long-term buy-and-hold investors and active traders using tactical strategies.

Competitive Landscape

XLK competes in a crowded field of growth-oriented ETFs. Its most direct rival is the Vanguard Information Technology ETF, which offers broader exposure by including small- and mid-cap tech stocks. For investors seeking a wider tech-adjacent basket that includes internet giants like Google and Meta, the Invesco QQQ Trust is the primary alternative. Within the SPDR family, XLK is often paired with the Communication Services Select Sector SPDR (XLC) to capture the full "Big Tech" spectrum. Other specialized competitors include the iShares Semiconductor ETF for those wanting pure-play chip exposure and the iShares Expanded Tech-Software Sector ETF for a software-heavy tilt.

Strategic Outlook and Role in Portfolios

XLK’s long-term performance is driven by the secular trends of digital transformation, cloud computing, and the proliferation of artificial intelligence. It serves as a "growth engine" for portfolios, typically outperforming broader market indices during periods of technological innovation and low-to-moderate interest rates. Because it focuses on companies with high free cash flow and strong balance sheets, XLK is often viewed as a "quality growth" play rather than a speculative tech bet. The fund pays a modest quarterly dividend, providing a small yield that differentiates it from more aggressive, non-dividend-paying growth funds. For sophisticated investors, XLK’s highly liquid options market makes it a premier vehicle for income generation through covered calls or for protecting gains via protective puts during periods of sector-specific volatility.