Global X Enhanced Cdn Oil & Gas Covered Call ETF (ENCL.TO)

Likes it. Bit of leverage at 1.25x, dynamic calls. Energy stocks tend to be more volatile, so there's a real opportunity to harvest extra income from covered calls. Reasonably good long-term hold.

Compare it to XEG with its 44% return, but only 34% for ENCL. At end of last year they were tracking closely. But January saw big run in O&G stocks, and covered calls cap that.

May want to pair it with XEG.

No matter the product, you don't earn the yield, you earn the total return. In most of them, your capital is being eroded. The distribution may be 12-17%, but that's not the total return. 

So his caveat is that you really understand the total return you're getting. Even though they're distributing a lot of yield, you'll see the price on the chart go down over time.

They're intended to be tax-efficient income, and he likes them from that perspective. So they make a lot of sense in a taxable account, especially if you're cautious or income-oriented. In a registered account if you're bullish on something, you don't need the covered calls. You just want to be long the underlying security, as you'll get better upside performance.

ENCC is the un-levered version so he would gravitate towards that since both are similar. No more than 10% of the portfolio.

When he owns something cyclical like an oil company, he's not generally trying to own it for income but, rather, for growth. For income, there are better strategies such as bank covered calls or utilities strategies. Oil is range bound, unless there's more geopolitical conflict, not a ton of upside in energy names.

Look elsewhere for income or growth. If you're really fond of the energy market and want to generate some income, you could go this route, but he'd do it differently.