I was thinking of targeting both the Utilities and financials etfs (more utilities as I think banks are fucked)....which ETF are you buying? your investing startegy is mostly dependend upon the markets
I was looking at some of those...wondering what other think of them....mostly BMO I think....is the divvy sustainable and will this strategy continue to work in the longer term?
These are ETF's with have an added strategy of writing out of the money calls against their holdings to boost return....I have written some covers calls on ETFs. Generally, I find most don't have the volatility to warrant great premiums.
Writing covered calls tends to work best in enhancing yield when markets are trending sideways. Call witer, you or BMO, collects the premium for writing the call and also with the Banks or Utilities you get the dividend income. Downside is if the stock price moves up above the strike price the call buyer will exercise the option and call away your stock and you lose the capital gain above the strike price. So in a strong bull market this strategy or an ETF using it will underperform. Try seaching BNN website there should be some commentary about these products and one specific commentator to look at is Larry Berman (Berman's Call on BNN) I believe he also has a blog.I was looking at some of those...wondering what other think of them....mostly BMO I think....is the divvy sustainable and will this strategy continue to work in the longer term?