(FTHI) First Trust BuyWrite Income - Ratings and Ratios

The First Trust BuyWrite Income ETF (NASDAQ:FTHI) is an actively managed exchange-traded fund that seeks to generate additional income for its shareholders by employing a covered call strategy on the S&P 500 Index. By investing in a diversified portfolio of U.S.-listed equity securities and selling call options on the S&P 500 Index, the fund aims to capture the premiums from the options sales, which are then distributed to shareholders on a monthly basis.

The funds investment strategy is designed to provide a regular income stream to investors, making it an attractive option for those seeking yield in a low-interest-rate environment. The covered call strategy involves selling call options on the S&P 500 Index, which gives the buyer the right, but not the obligation, to purchase the underlying index at a predetermined strike price. By selling these options, FTHI generates cash flow in the form of premiums, which can help offset potential declines in the value of the underlying securities.

From a technical analysis perspective, FTHIs price action suggests a bullish trend, with the 20-day simple moving average (SMA) at $22.25 and the 50-day SMA at $21.53, indicating a potential upward momentum. The average true range (ATR) of 0.17, or 0.76%, indicates relatively low volatility. Given the current price of $22.41, and considering the 52-week high and low of $23.03 and $19.36, respectively, it is likely that FTHI will continue to trade within this range.

Using the available technical and fundamental data, a forecast for FTHI can be made. With the S&P 500 Index being the underlying asset for the call options, the performance of FTHI is closely tied to the indexs movement. Assuming a moderate growth in the S&P 500 Index, FTHIs covered call strategy is likely to continue generating premiums, which will be distributed to shareholders. Based on the current AUM of $1.321 billion, it is expected that FTHI will maintain its liquidity and continue to attract investors seeking income-generating strategies. A potential price target for FTHI could be around $23.50, representing a 4.5% increase from the current price, driven by the continued collection of premiums and a moderate increase in the S&P 500 Index.