Fidelity MSCI Information Technology Index ETF (FTEC) Covered Calls

The Fidelity MSCI Information Technology Index ETF (FTEC) is a low-cost, passively managed fund that tracks the MSCI USA IMI Information Technology 25/50 Index. The fund provides broad exposure to the U.S. technology sector, covering software, hardware, and semiconductor companies across the large, mid, and small-cap spectrum. With one of the lowest expense ratios in the industry, FTEC is a premier tool for capturing the growth and innovation of the American tech economy.

You can sell covered calls on Fidelity MSCI Information Technology Index ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for FTEC (prices last updated Fri 4:16 PM ET):

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The Fidelity MSCI Information Technology Index ETF (FTEC) is a high-efficiency investment vehicle designed to track the performance of the United States information technology sector. The fund follows the MSCI USA IMI Information Technology 25/50 Index, which represents the full theoretical breadth of the U.S. tech market. Unlike many competitors that focus exclusively on "blue-chip" tech, FTEC’s "all-cap" approach includes exposure to emerging mid and small-cap innovators alongside established global leaders.

The fund employs a representative sampling indexing strategy, investing in a selection of securities that collectively match the investment profile of the underlying index. To ensure regulatory compliance and avoid excessive concentration, the 25/50 capping methodology prevents any single issuer from exceeding 25% of the fund’s assets and limits the sum of all issuers with a weight greater than 5% to no more than 50% of the total. This structure provides a diversified yet powerful engine for growth driven by digital transformation.

Core Business and Products

The core "product" of FTEC is its diversified portfolio of approximately 300 holdings. The fund is heavily concentrated in three primary sub-industries: Software, Semiconductors & Semiconductor Equipment, and Technology Hardware, Storage & Peripherals. Major holdings typically include the "titans" of tech, such as Microsoft, Apple, and NVIDIA. Other significant constituents include enterprise leaders like Salesforce and Broadcom.

Competitive Landscape

The technology ETF sector is the most heavily traded and competitive segment of the market. FTEC competes primarily on its industry-leading low expense ratio (0.084%) and its inclusion of small-cap tech stocks that are often excluded from other major indices. Key optionable competitors in the tech space include:

1. Technology Select Sector SPDR Fund: The most liquid tech ETF, tracking the S&P 500 tech components and focusing on the largest large-cap leaders.
2. Vanguard Information Technology ETF: A direct rival that tracks a similar broad MSCI index and competes closely with FTEC on cost and total holdings.
3. Invesco QQQ Trust: While it includes non-tech sectors (like consumer discretionary), it is the primary benchmark for "growth" tech and offers the most liquid options market in the world.
4. VanEck Semiconductor ETF: A thematic competitor that focuses exclusively on the chip industry, offering a more concentrated risk/reward profile than FTEC.
5. iShares Expanded Tech-Software Sector ETF: Focuses specifically on the software and services sub-sector, relevant for investors seeking pure-play SaaS exposure.

Strategic Outlook and Innovation

The strategic outlook for FTEC is intrinsically tied to the "AI Revolution" and the continued migration of enterprise workflows to the cloud. As businesses across all sectors integrate generative AI and machine learning into their operations, the semiconductor and software companies within FTEC are positioned as the primary "picks and shovels" providers. The fund also benefits from the cyclical nature of hardware upgrades, such as the transition to AI-enabled personal computers and smartphones.

Innovation within the FTEC portfolio is currently dominated by advancements in large language models (LLMs), edge computing, and cybersecurity. Many constituent companies are pivoting their R&D toward specialized silicon for AI training and sustainable data center infrastructure. Furthermore, the push for digital sovereignty and domestic chip manufacturing is creating new growth opportunities for the U.S.-based equipment manufacturers in the fund. FTEC’s broad-based approach ensures that investors are exposed to the entire lifecycle of technological innovation, from foundational hardware to high-margin enterprise software.

Want more examples? FTDR Covered Calls | FTEK Covered Calls