First Trust Health Care AlphaDEX (FXH) Covered Calls

The First Trust Health Care AlphaDEX Fund is a smart-beta investment fund that tracks the StrataQuant Health Care Index. It utilizes a proprietary quantitative selection methodology—AlphaDEX—to rank U.S. healthcare companies based on growth and value factors. By over-weighting stocks with higher fundamental rankings, the fund seeks to outperform traditional market-cap-weighted healthcare benchmarks.

You can sell covered calls on First Trust Health Care AlphaDEX 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 FXH (prices last updated Wed 1:15 PM ET):

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The First Trust Health Care AlphaDEX Fund (FXH) functions as a factor-tilted investment vehicle designed for investors seeking exposure to the U.S. healthcare sector with a systematic, performance-driven approach. Unlike traditional index funds that weigh holdings by market capitalization, FXH applies the AlphaDEX methodology: a rules-based process that screens the healthcare universe within the Russell 1000 Index for growth and value metrics. These metrics include price appreciation, sales growth, book value, and cash flow.

Selected stocks are tiered and weighted, ensuring that the portfolio is tilted toward companies showing stronger fundamental health and momentum. This disciplined approach aims to provide exposure to a diversified mix of pharmaceuticals, biotechnology, and healthcare services providers, effectively reducing concentration risk often found in cap-weighted indices that are dominated by a few massive firms.

Competitive Landscape

FXH competes within the broad healthcare equity space, which is dominated by low-cost, passive index funds. Primary optionable peers include the Health Care Select Sector SPDR Fund, which is the most liquid standard-bearer for the sector, and the Vanguard Health Care ETF, which offers extremely low-cost, broad-market exposure. For investors seeking targeted biotechnology exposure, the iShares Biotechnology ETF is a frequently used optionable alternative.

Strategic Outlook and Innovation

The strategy is aimed at capturing "alpha" or excess returns by focusing on fundamental financial strength rather than firm size alone. The fund serves as a tactical tool for investors who believe the healthcare sector can be exploited through factor-based screening rather than passive market tracking. The strategic outlook remains tied to the fundamental health of the U.S. healthcare industry and the efficacy of its quantitative rebalancing model.

Innovation is found in the AlphaDEX selection process, which removes human bias and provides a repeatable, data-backed approach to sector allocation. As the healthcare industry evolves, the fund’s rules-based rebalancing allows it to adapt to changing market leaders, providing a sophisticated alternative for investors looking to balance sector exposure with quantitative discipline.

Want more examples? FXG Covered Calls | FXI Covered Calls