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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This month we feature an ETF that aims to deliver high income by using leverage and derivative instruments. The second comes from iShares and invests globally in companies that it sees as being at the forefront of electric and autonomous vehicle development.
MULVIHILL U.S. HEALTHCARE ENHANCED… Read More
With the goal of tapping into the popularity of high-yield investments, RBC recently launched an ETF that invests in Canadian dividend-paying companies—but with a covered call strategy. Meanwhile, we also look at an ETF focused on using leverage in bull markets but switching to short… Read More
A: Many thanks—it’s always a pleasure to hear from a long-time happy subscriber!
I’ve heard good and bad things over the years about investment clubs. First off, you need to keep in mind that the term “club” can be misleading. For many people, it conjures up… Read More
Purpose Investments launched a series of leveraged single-stock ETFs in December 2022. Here we discuss the ETF that holds Apple shares but there are also similar ETFs that invest in single large U.S. companies, These include Amazon, Berkshire Hathaway, Alphabet, and Exxon. In addition, we… Read More
CI FIRST ASSET TECH GIANTS COVERED CALL ETF $13.95 (Toronto symbol TXF) invests in what it sees as 25 of the most innovative U.S. technology companies. These include Apple, IBM, Salesforce, Nvidia, Adobe and Intel.
First Asset Tech Giants has a very high 13.6% yield. However, the ETF’s portfolio does… Read More
This month we highlight two ETFs from Harvest that use leverage and call-option writing in an effort to enhance the returns of their portfolios.
HARVEST BRAND LEADERS ENHANCED INCOME ETF $10.36 (Toronto symbol HBFE) invests indirectly in large U.S. companies with global brand recognition. The ETF invests all its… Read More
Many investors over-emphasize investment predictions as a way to choose investments, especially when just starting out. It’s easy to understand. Following predictions can be easy and fun, like betting on tips at a racetrack or a casino.
Investing newcomers may also downplay portfolio balance and diversification… Read More
A: Evolve Global Healthcare Enhanced Yield Fund, $20.63, symbol LIFE on Toronto (Units outstanding: 8.7 million; Market cap: $179.5 million; www.evolveetfs.com), aims to track the Solactive Global Healthcare 20 Index Canadian Dollar Hedged Index.
LIFE invests primarily in the stock holdings of that index. The fund… Read More
SIMPLIFY VOLT CLOUD AND CYBERSECURITY DISRUPTION ETF $5.95 (New York symbol VCLO) is an actively managed fund that invests in companies that it believes are positioned to lead developments in cloud-based data management and security.
The portfolio is concentrated, with large holdings in Crowdstrike, Cloudflare, Microsoft, Alphabet, Apple,… Read More
A: Harvest Healthcare Leaders Income ETF, $7.74, symbol HHL on Toronto, (Units outstanding: 131.6 million; Market cap: $1.0 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
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
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