Larry Berman CFA, CMT, CTA Harvest Premium Yield Treasury ETF HPYT-T PARTIAL BUY Jan 29, 2024

Portfolio of US treasury bonds. Selling covered calls provides income, but limits upside. Good for dividend investors. MER is a little higher than would prefer. Available in USD version. 

Long-dated (20-30 years) bond fund, while using leverage and covered call strategies to enhance income. Doesn't perform well when interest rates go up. Must be confident that rate cuts are coming and pretty aggressively to want to own this. That was supposed to be the case, but now it seems that rate cuts will be pushed back a bit.

Won't start to move until yields start to move and rates start to get cut.

Long US treasuries and writes covered calls to generate income. If you look at the chart, while you've been making 17% in yield, you've lost the equivalent in price terms. You must look at total return. Those that focus on the yield and don't understand the return are doomed to risk. Volatile.

Instead, just hold TLT or ZTL -- US bonds at the long end of the treasury curve -- and don't worry about the yield so much.

A covered call on T-bills. This distribution of 17.21% is suspiciously too high. A few things to consider: you cover-write the bonds here, so you won't capture a bounce in bond prices.

Wrapper for various covered call ETFs. Gives you more diversification across a number of sectors, while utilizing a covered call strategy for income on 1/3 to 1/2 of the portfolio. He likes that part of the portfolio can breathe to enjoy any upside. Except for tech, most of the other sectors covered are risk-averse.

Using call options to generate income on equities and fixed income products. We saw worrying signs a couple of weeks ago that the correlation between the fixed income part of your portfolio and US recession risk may be breaking down. 

Ideally, if there were a recession on the horizon, rate cuts would be forecast and bonds would be purchased. The bond market would go up and there would be a flight to treasuries, all while the stock market's going down. A couple of weeks ago, we saw both bonds and equities going down. With the US launching a trade war against the entire world, investors were trying to get out of US dollar positions. US treasuries may not have the type of cushioning effects you want in the tariff trade war. Short-term instruments are probably better.

Holds longer-term bonds with a covered call. Inflation challenges US bond holders and pressures long bonds. So, this ETF is under high pressure. Dividend is 17%.

Strategy that gets income off the bond market with an option overlay. When you look at the price relative to TLT, it's been down over the last couple of years but the yield has been higher. Total return vs. just owning TLT (plain long bonds without any enhancement) results in doing better with the covered call strategy. Reason is that yields have generally gone up and prices have gone down.

But if it was the other way around, TLT is going to do better.

In a defensive market for bonds you'll get more income off this one, but don't expect much price appreciation. It's an income play. That income is capital gains, which is very tax efficient. Good way to play the bond market, and better in taxable accounts than in registered accounts -- you're getting income from US bonds via capital gains instead of interest.

Long-duration bonds in here. If interest rates go up, bonds go down. Attenuates some volatility by writing calls on top for income. If rates go down, you'll get a burst in performance. But you'll get called away, because you sold the calls. Probably OK to stick with it. Makes sense in a sideways or slightly up/down market.

If you think long-term rates are going to decline, then you're giving up a lot of the upside the bonds would give you.