Covered call strategy permitted for mutual funds, subject to specified exposure limits, disclosure and daily mark-to-market requirements. Mutual fund schemes (excluding index funds and ETFs) may write call options only under a covered call strategy on constituent stocks of major indices, subject to limits on total notional value relative to equity holdings and caps on underlying shares as a percentage of unencumbered holdings. Schemes must continuously comply with these limits, have a defined rebalance period for passive breaches, hold underlying shares when writing calls, avoid hedging those shares with other derivatives, keep option premium exposure within existing gross exposure ceilings, and mark written calls to market daily with NAV impact until position closure or expiry.
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Provisions expressly mentioned in the judgment/order text.
Covered call strategy permitted for mutual funds, subject to specified exposure limits, disclosure and daily mark-to-market requirements.
Mutual fund schemes (excluding index funds and ETFs) may write call options only under a covered call strategy on constituent stocks of major indices, subject to limits on total notional value relative to equity holdings and caps on underlying shares as a percentage of unencumbered holdings. Schemes must continuously comply with these limits, have a defined rebalance period for passive breaches, hold underlying shares when writing calls, avoid hedging those shares with other derivatives, keep option premium exposure within existing gross exposure ceilings, and mark written calls to market daily with NAV impact until position closure or expiry.
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