MFs turn to covered call strategy to squeeze out gains in flat market

Restricted in 2010, the regulator allowed writing options under covered calls in 2019

Mutual funds (MFs) are using derivative instruments to improve returns amid lacklustre markets. Many schemes have introduced the option of using covered calls as part of their operations. New schemes with an enabling provision for using covered calls include the SBI Business Cycle Fund, Mirae Asset Infrastructure Fund, Kotak Rural Opportunities Fund, and the ICICI Prudential Conglomerate Fund. An existing scheme, Mirae Asset Aggressive Hybrid Fund, recently notified investors that it would be modifying the fund to include use of covered call options. 

A call option is the right to buy a stock or index at a predetermined price. The