Investing Ideas

What equity options-based ETFs bring to the table

Equity options-based ETFs may offer a liquid alternative to traditional stock allocations.

By: Fidelity Investments
Updated: 4/21/2026
Key Takeaways
  • Equity options-based ETFs are an emerging category of actively managed ETFs that provide a liquid alternative to long-only funds.
  • The strategies combine buying securities with the purchase and sale of derivatives (put and call options) to create funds similar to traditional equity funds but with downside protection or yield generation, and may offer complementary benefits within the equity allocation of a portfolio.
  • By offering downside protection and dampening volatility, equity options-based ETFs may help keep clients invested through periods of turbulence and prevent emotional decision-making.
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