AMZP generates income from Amazon stock through a covered call strategy, selling monthly options against AMZN shares to harvest premium. This converts a non-dividend growth stock into a high-yielding income vehicle, though it caps upside participation.
How It Works
The fund holds Amazon shares and systematically writes at-the-money or slightly out-of-the-money call options each month, collecting premium that gets distributed as yield. When AMZN rallies above the strike price, shares get called away and the fund re-establishes positions. This mechanical options overlay transforms Amazon's growth potential into immediate income, typically generating 15-25% annual yield depending on volatility.
Key Features
- 21%+ yield from a stock that pays no dividends, achieved through monthly option premium
- Single-stock focus provides concentrated exposure to Amazon's business fundamentals
- Monthly distributions from option premium, not dependent on company dividend policy
Risks
- Upside capped at option strike price — you'll miss most of Amazon's rallies above 2-3% monthly
- Still exposed to Amazon's full downside risk — options premium only cushions 1-2% monthly
- Concentrated single-stock risk means any Amazon-specific issue hits the entire portfolio
Who Should Own This
Best for retirees or income investors who want Amazon exposure but need current income, not growth. Also suits investors who think AMZN will trade sideways or down — you're essentially betting against big upward moves. Not for anyone bullish on Amazon's growth prospects, as the covered calls will cap gains at roughly 20-30% annually even if the stock doubles.