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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BROMPTON LIFECO SPLIT CORP. $6.76 (Toronto symbol LCS; Shares outstanding: 6.1 million; Market cap: $41.2 million; Dividend yield: 12.9%; www.bromptongroup.com) holds shares of Canada’s four largest publicly listed life insurance companies.
These are Sun Life Financial, Manulife Financial, Great-West Lifeco and iA Financial. The company holds the four… Read More
GLOBAL X GOLD PRODUCER EQUITY COVERED CALL ETF $25.08 (Toronto symbol GLCC) invests in an equal-weighted portfolio of North American-listed gold mining companies. The portfolio currently holds 10 stocks, with all the top producers such as Barrick Gold and Newmont Corp. represented.
The ETF yields a high 8.4%. However, the… Read More
Last year, Canada saw the listing of 164 new ETFs. This month we highlight two of the most successful new launches in 2023. The first is an balanced ETF, while the second invests in technology companies with a covered call strategy.
PURPOSE ACTIVE BALANCED ETF $21.61 (Toronto symbol… Read More
BMO COVERED CALL CANADIAN BANKS ETF $17.30 (Toronto symbol ZWB) holds shares of Canada’s six largest banks (CIBC, TD Bank, Bank of Montreal, Bank of Nova Scotia, Royal Bank and National Bank).
The fund started up in January 2011. Its MER is a relatively high 0.71%.
BMO Canadian High Dividend Covered… Read More
FINANCIAL 15 SPLIT CORP. $7.81 (Toronto symbol FTN; Shares o/s: 47.4 million; Market cap: $370.2 million; Dividend yield: 19.5%; www.quadravest.com) holds shares of 15 big Canadian and U.S. financial companies.
These include Bank of Nova Scotia, TD Bank, Manulife, Sun Life, CI Financial, Bank of America, Citigroup, Goldman… Read More
A: The CI First Asset Gold+ Giants Covered Call ETF, $9.59, symbol CGXF on Toronto (Units outstanding: 13.3 million; Market cap: $127.5 million; www.firstasset.com), holds an equal-weighted portfolio of the 15 largest gold and precious-metal companies as measured by market capitalization. Each is listed on… Read More
This month we feature a very high-yielding financial services ETF from Hamilton Capital Partners, and a top-performing North American value equity ETF from RBC.
HAMILTON CANADIAN FINANCIALS YIELD MAXIMIZER ETF $13.12 (Toronto symbol HMAX) invests in the top 10 Canadian financial services companies as measured by their total… Read More
CANOE EIT INCOME FUND $13 (Toronto symbol EIT.UN; Units o/s: 171.4 million; Market cap: $2.2 billion; Divd. yield: 9.2%; www.canoefinancial.com) is a closed-end fund that invests in a portfolio of dividend paying stocks. Canadian stocks account for 56.1% of its holdings, followed by the U.S. at 41.3%.
Canoe… Read More
A: Harvest Healthcare Leaders Income ETF, $7.79, symbol HHL on Toronto, (Units outstanding: 156.0 million; Market cap: $1.2 billion; www.harvestportfolios.com), holds a portfolio of 20 large-cap global healthcare companies. The fund’s manager selected them based on their perceived potential to provide attractive monthly income and… Read More
BROMPTON LIFECO SPLIT CORP. $5.74 (Toronto symbol LCS; Shares outstanding: 8.2 million; Market cap: $47.0 million; Dividend yield: 15.3%; www.bromptongroup.com) holds shares of Canada’s four largest publicly listed life insurance companies .
These are Sun Life Financial, Manulife Financial, Great-West Lifeco and iA Financial. The company holds the… Read More
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