Covered-Call ETFs Post 73.7% Rate of Payout-Return Gaps

* Editor's note: "AI PRISM" (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six tailored news items for each reader type.

1. A 23% Payout Rate but a -24% Return: Covered-Call Funds With Wide Performance Gaps

- Key summary: Among the 19 domestic covered-call ETFs with the highest annual payout rates, 14, or 73.7%, posted one-year total returns below their annual payout rates. PLUS High Dividend Weekly Covered Call had a payout rate of 23.34%, but its price fell 36.94%, leaving a total return of -23.88%. ACE US Big Tech 7+ Daily Target Covered Call (synthetic) had a payout rate of 24.67% but a total return of just 3.33%. Covered-call funds hold assets while selling call options to generate distribution income, so when asset prices fall, option premiums alone cannot offset losses. Even so, net assets in domestic covered-call ETFs swelled 86.6% to 28.058 trillion won from 15.037 trillion won at the end of last year, as of the 10th of this month.

2. Oil Prices Are Soaring, but Refiners Aren't Smiling

- Key summary: The spot price of Dubai crude surged to $123.66 a barrel as of the 11th, but refining shares weakened instead. Since the 4th of this month, SK Innovation (096770) has fallen 1.16%, while S-Oil and GS (078930) dropped 5.53% and 6.05%, respectively. The declines reflect a rapid rise in the cost of buying Middle Eastern crude, which pushed the complex refining margin down for a sixth straight week to $26.4 a barrel from $33.6. Meanwhile, concerns over AI investment originating in the U.S. also weighed on the market, and the KOSPI closed 3.26% lower at 6,684.37. The Korea Exchange's after-market session opened for the first time that day.

3. TSMC to Raise Advanced Chip Output 70%

- Key summary: Monthly output of products made on Taiwan-based TSMC's 3-nanometer process is expected to rise about 70% over 18 months. Monthly 3-nanometer output will expand to 180,000 wafers by the end of this year and 210,000 by the middle of next year, from 120,000 to 130,000 at the end of last year, while 2-nanometer output will increase to 110,000 by the middle of next year. TSMC said it has secured order visibility through 2029 and 2030, raising its annual capital spending forecast to $60 billion to $64 billion and allocating 70% to 80% of that to advanced processes. It also plans to lift capacity for CoWoS (chip on wafer on substrate) advanced packaging to 260,000 units a month by the end of 2028 to meet demand from customers including Nvidia.

4. Riding the AI Boom, ICT Exports Near $60 Billion

- Key summary: Exports of information and communications technology products last month rose 162.6% from a year earlier to $59.98 billion, a record high for any month. They accounted for 61% of total exports of $98.25 billion, the first time the ICT share has exceeded 60%. Semiconductors led the increase, with exports jumping 209% to $46.67 billion last month, while exports of computers and peripherals expanded 383.1% to $6.4 billion. Displays, however, fell 7% to $1.69 billion, weighed down by lower prices for organic light-emitting diode panels.

5. Rerouted Through the Red Sea to Avoid Hormuz: Fears of a Double Bottleneck in Ulsan's Crude Supply Chain

- Key summary: Crude shipped to Ulsan Port from Saudi Arabia's Yanbu Port to avoid security risks in the Strait of Hormuz surged by as much as 8.7 times in the first half of this year. Volumes, which ran at 230,000 to 280,000 tons a month last year, peaked at 2.218 million tons on eight vessels in June and 2.206 million tons on eight vessels in July, then fell 37.4% to 1.382 million tons on five vessels in August. But the east-west pipeline leading to Yanbu Port came under drone attack, and navigation risks have grown in the Bab al-Mandab Strait at the outlet of the Red Sea. That is why concerns are emerging about a double bottleneck in which the existing route and the detour are blocked at the same time. Ulsan Customs said it will closely monitor cargo volumes by loading port and sea route to prepare for supply chain shocks.

6. Who Will Win the U.S. Midterms? Betting Through ETFs

- Key summary: Ahead of the U.S. midterm elections in November, Wall Street firms are moving to launch exchange-traded funds that bet on the election outcome itself. GraniteShares is seeking to list four ETFs that would invest separately in Democratic and Republican victories in the Senate and House, while Roundhill Investments and Bitwise Asset Management are preparing similar products. The funds would invest in event contracts tied to election results, which settle at either $1 or $0 once the outcome is confirmed. For that reason, the filings separately note the risk of catastrophic losses. ETFs are overseen by the U.S. Securities and Exchange Commission while event contracts fall under the Commodity Futures Trading Commission, and with the two regulatory frameworks intersecting, many of the products remain at the filing and review stage.