John Hood is president and portfolio manager at J.C. Hood Investment Counsel. His focus is on ETFs and options.
The Dow and Canadian banks have had a strong recovery already so this covered call strategy should modify volatility yet provide good growth since only approximately 50 per cent of covered calls ETFs are hedged with the calls.
BMO Covered Call DJIA Hedged to CAD ETF
BMO Covered Call Canadian Banks ETF
BMO 2015 Corporate Bond Target Maturity ETF
Past picks: Sept. 16, 2011
iShares S&P 500 Index Fund CAD Hedged
Total return: +21.23 per cent
iShares S&P/TSX Capped Energy Index Fund
Total return: +3.48 per cent
BMO S&P/TSX Equal Weight Banks Index ETF
Total return: +10.67 per cent
Total Return Average: +11.79 per cent
We have been saying for many months that there was no need for panic and to maintain your asset allocation particularly the U.S. allocation. The EU crisis, as we suggested is working its way forward, or at least the tools are in the toolbox regarding Eurobonds, the German constitutional issue and the Dutch election. Nevertheless we are not raging bulls hence the covered calls recommendation but we are looking to add to our equities in EM, EU and China once the evidence is there. Some commodities as well.
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- BMO Covered Call DJIA Hedged to CAD ETF$20.95+0.07(+0.34%)
- BMO Covered Call Canadian Banks ETF$17.90-0.17(-0.94%)
- iShares S&P 500 Index ETF$27.56+0.06(+0.20%)
- iShares S&P/TSX Capped Energy Index ETF$12.34-0.14(-1.12%)
- BMO S&P/TSX Equal Weight Banks Index ETF$26.36-0.32(-1.20%)
- Updated May 24 3:49 PM EDT. Delayed by at least 15 minutes.