BMO Covered Call Canadian Banks ETF (ZWB.TO)

One of the covered calls that he really likes, and he has lots of it. He likes getting the dividends from the banks plus the covered call overlay. What is interesting about this is that it is only 50% hedged. Has a very good yield.

You should hold some of this as well as ZUB-T. You don’t want to be exposed to the US$ so it should be hedged.

Canadian Banks are still vulnerable to the market risk. He is starting to build banks in his sleep at night portfolio, however.

Stock vs. Stock. Financial ETFs ZWB and FIE-T. ZWB-T has the covered call overlay which he likes. FIE-T holds a bunch of other ETFs. It has a fixed payment so you are probably getting some capital returned. You would get more protection in a downturn. Would like to see both in a portfolio.

Soft earnings last week. Before that they were on the high side. ZUB-T vs. ZEB-T graphs suggest we have 5% lower to go. We could go 5 % lower on Canadian banks. He has been nibbling away these last few weeks, but prefers the ZWB-T with covered call overlay.

This one writes covered calls against its position, i.e., selling a Call where you receive income. The problem is you're selling away future gains. He would prefer the ZEB.

Banks. Equally weighted with covered call overlay. He thinks the banks will not do much for the next while. In strong markets you want ZEB-T.

Stock vs. Stock: ZEB-T vs. ZWB-T. ZWB-T has the covered call overlay and he prefers that. But on a total return basis, in a bull market, you will underperform with this strategy. ZWB-T will outperform in a down or sideways market.

Recommends this to get into banks. Has a covered call strategy on half the portfolio and that generates extra yield. Depending on volatility, the premium is bigger or smaller. Most banks are pretty close to their one year out price target. Maybe we have another quarter or so when the numbers are okay, but September is when there are corrections, so he would wait if desiring to buy this one.

This is good only because all the Canadian banks are good, but otherwise he doesn’t believe in ETFs. He has RY-T, BNS-T and TD-T. Canadian banks are extremely good.

Bank ETF’s while waiting for the oils to pullback? Banks are also near the high end of their range, so to play them now with new money, he would use this, which gives you all the banks equally weighted with a covered call overlay. If we get a pullback, you get some insulation. Slightly lower beta because of the covered call overlay. Gives you an extra 1.5%-2.5% extra yield because of the covered call. Also, the EUFN-Q (ETF) is one to follow because it has already broken down through its 200 day moving average, which is one of the 1^st signs. Often European banks can be a leading indicator. Thinks there are some risks coming into the banks.

(A Top Pick April 25/13. Up 20.51%.) He likes the idea of the covered calls on the banks. Has a dividend and capital gains of a little more than 5%.

Stock vs. Stock: ZEB or ZWB. Dividends have been dropping over the last couple of years. The covered calls are a factor of the volatility. The Montreal exchange has an MVX index that is a measure of the volatility on the TSX. The premium from the options has been coming down and that is why you are seeing the dividends on this ETF dropping.

Canadian banks. 30 months without a 10% correction. 5 years into a bull market. Typically 4. There are examples in history with many more years before a meaningful correction. Likes ZWB which is an equally weighted Bank ETF with covered call strategy. It should not be more than a 10-20% correction. A healthy giveback. We won’t pull back as much as the US in a correction phase. Canadian banks should participate 70%

ZWB is a covered call and good for income. ZEB is good for growth. Banks are in good shape and he doesn’t have a problem here.