Using Covered Calls As An Income Strategy

Using Covered Calls As An Income Strategy

Table of Contents

? Finding Income in the Current Macro Environment ? Explaining Covered Calls ? Option Writing ? Covered Call Mechanics ? Covered Call Market Scenarios ? Volatility ? Covered Calls on Nasdaq 100

? Global X Management Company LLC Confidential | All numbers are approximate

2 6 7 11 14 17 18

1

Sluggish Growth

OECD's Economic Outlook

0% -3% -6% -9% -12% -15%

World GDP Growth -6.0%

o The world's economy is expected to slow down further if the Covid19 situation persists.

o Impact of slowdown to affect corporate earnings, lowering equity yields

o Industrial commodities expected to see lower demand over that time period

o Central banks globally expected to continue easing, potentially extending the low to negative yield environment

Source: The Organisation for Economic Co-operation and Development ? June 2020. The outlook considers single hit scenario where in no another COVID-19 wave occurs before end of 2020.

? Global X Management Company LLC Confidential | All numbers are approximate

2

2

Central Banks

Central banks around the world have maintained easing monetary conditions, pumping money into the economy, often resulting in lower interest rates

CENTRAL BANK RATES: Trailing 2 years of Policy Rates (%) Source: Federal Reserve Bank of St. Louis, Bank of England, European Central Bank, and Bank of Japan as of 05/31/2020

2.4

1.8

0.1

1.2

0.05

0.6

0.0

-0.05

-0.6

-0.50

-1.2

Apr-18 May-18 Jun-18

Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20

Central Banks US Federal Reserve ECB Bank of England

Bank of Japan China

United States

ECB

United Kingdom

Japan

Trajectory

Fed indicated it will continue to maintain near zero rates through 2022.

Expected to further ease in monetary policy to support crisis struck economy.

BoE slashed its rates to record low of 0.1% in March and launched 200 Billion Pound asset purchase program.

Expected to further ease monetary policy in coming time.

Easing policies in place and expected to continue easing.

? Global X Management Company LLC

3

Confidential | All numbers are approximate

Negative Interest Rate Environment

TREASURY REAL YIELD CURVE RATES: 1 YEAR (%) Source: Federal Reserve Bank as of 06/26/2020

1.2

0.8

0.4

0.0

-0.4

5 YR

7 YR

10 YR

20 YR

30 YR

-0.8

Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

TOTAL NEGATIVE YIELD DEBT GLOBALLY IN TRILLIONS1 ($) Source: Bloomberg as of 06/26/2020

15 12

9 6 3 0

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20

(1) Bloomberg Barclays Global Aggregate Negative Yielding Debt Market Value Index : It measures the stock of debt with yields below zero issued by governments, companies and mortgage providers around the world which are members of the Bloomberg Barclays Global Aggregate Bond Index

? Global X Management Company LLC

4

Confidential | All numbers are approximate

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