Call options give the holder (or buyer) the right to buy the underlying stock at a specified strike price until the expiration date. The seller of the call in turn has the obligation to sell or deliver the underlying security at the strike price until the expiry date.
If you sell call options on your stocks, you’ll pocket low-risk premium income even if your stock just sits there. Selling call options on a stock you own is known as a covered call. This strategy is aimed at generating extra income, but also at lowering risk and volatility.
However, investors who consistently sell covered calls on their portfolios will substantially underperform over time. That’s because the buyers of your calls will always exercise away your big winners.
You can buy a call now, and lock in the future price of a stock. Note, though, that the total price that you’ll eventually pay for the stock will be the cost of the shares, plus the cost of the call option and commissions. If the stock stays around the same price, you lose one commission, plus the cost of the call.
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Split-share corporations come with inherent drawbacks that can hand investors unexpected and unwelcomed costs sooner than they’d planned
Split-share corporations: they’re just one of the areas in which Pat McKeough’s Inner Circle can get our investment research. Members also get to ask investment questions of Pat… Read More
What are the key differences between dividend and index investing?
Dividend investing focuses on stocks that pay regular cash distributions to shareholders, while index investing aims to replicate the performance of a broad market index by holding a diversified portfolio of securities.
One big advantage of index… Read More
This month we highlight the Canadian listing of a very popular U.S. ETF from JP Morgan, as well as another listing of a “quality equity” fund from BMO.
JPMorgan US Equity Premium Income Active ETF $26.61 (Toronto symbol JEPI) invests in the shares of U.S. companies—plus it… Read More
This month we focus on high-income, leveraged single-stock ETFs; one was launched by Harvest and another, focused on physical gold bullion, was launched by BMO.
HARVEST ELI LILLY ENHANCED HIGH-INCOME SHARES $12.04 (Toronto symbol LLHE) invests in the shares of Eli Lilly & Co. (symbol LLY on New York)… Read More
CANOE EIT INCOME FUND $14.42 (Toronto symbol EIT.UN; Units o/s: 178.8 million; Market cap: $2.6 billion; Divd. yield: 8.3%; www.canoefinancial.com) is a closed-end fund that invests in a portfolio of dividend paying stocks. U.S. stocks account for 49.2% of its holdings, followed by Canadian at 47.5%.
Canoe pays… Read More
Understanding stock options will lead you to see them as highly speculative investments—and more like a gamble than a sure thing
While it’s possible to make money in stock options, it’s important to realize that there’s a large element of risk in these speculative investments—and you… Read More
Despite the large number of ETFs already on the market, Canadian managers continue to launch new funds. This month we highlight an ETF from CI Investments that selects high-quality, dividend-paying U.S. companies. The second ETF comes from Hamilton Capital Partners. It invests in North American… Read More
A: Global X Gold Producer Equity Covered Call ETF, $27.75, symbol GLCC on Toronto, (Units outstanding: 8.4 million; Market cap: $233.1 million; www.globalx.ca) invests in an equal-weighted portfolio of North American-listed gold mining companies.
The ETF’s portfolio currently holds 10 stocks, with all the top producers… Read More
This month we discuss two new ETFs that aim to use derivative instruments to target specific investment outcomes. The BMO U.S. Equity Buffer ETF promises upside potential along with limited downside protection against U.S. market declines. The Harvest Industrial Leaders Income ETF plans to supplement… Read More
This month we look at new ETFs that use derivative instruments to target specific investment outcomes. The BMO U.S. Equity Buffer ETF aims to offer upside market gains, combined with limited protection against market declines. The Harvest Industrial Leaders Income ETF aims to supplement the… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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