Richard Croft First Asset Can-Energy Covered Call ETF OXF-T COMMENT Aug 15, 2012

First of all, you have to like energy because any covered call strategy is bullish. He would rather have cash flow. The cash flow from this particular ETF would be a better way to play the energy space than simply buying it outright. However, they are only writing options against 25% of the portfolio each month, so you have some upside. Some of those oil companies do quite well. He is not a believer that a broad-based basket of big-name oil companies are going to do much more than a broad-based basket of big-name goal companies are going to do.

Richard Croft

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BUY

Covered Call ETFs: They have all struggled this year. Their underlying holdings get called away. If you are looking for a little bit of income on top of your equities this could be a good one. It has nice covered call writing of just 25% so you get some nice protection on the downside.

BUY ON WEAKNESS

The question is do you want to time the market or be in the market. If you want the yield, and you are okay with some volatility, then these ETFs are nice to hold. Over the next year the sector is probably mostly sideways. He thinks energy stocks will pull back more over the next 6 months.

COMMENT

Dump energy stocks for this ETF? Not sure he would dump Canadian oil right now. You have already gone through the gritting of the teeth process. Has never been thrilled with First Asset’s approach, because they are only selling covered calls on about 25% of the portfolio.

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Richard Croft First Asset Can-Energy Covered Call ETF OXF-T COMMENT Aug 15, 2012

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