Larry Berman CFA, CMT, CTA
BMO US Put Write ETF
ZPW-T
COMMENT
Jan 25, 2021
ZPH and ZPW way to extract yield from the market without taking a lot of risk. They have been okay but not great. ZPAY is a better way to benefit from the same strategy.
This writes puts on these stocks a little below and market and generates a yield. It's very defensive, but risky, but better than holding cash. It's exposed to the US dollar. ZPW will give you decent yield.
ZPH-T vs. ZPW-T. When the view is that the CAD$ is going to get weaker you don’t want to be hedged. If it is going to be stronger, then you want currency hedged.
He was a big fan of these put-write strategies--to write puts on the best companies on the market--when they launched, but they have since failed to execute this plan. He still holds these for the yields, though, because it provides an alternative source of yield. In a recession, it depends on how fast the markets go down. There is an embedded protection in these ETFs, giving you only half the downside. With these, you place a put, but don't own the companies, but rather harvest the yield off the option premium.
Pays a 7% yield. They take a basket of US stocks, then look at options premiums and carving off a bit of the upside and downside. He doesn't like engineered products like this. ZPW can be depleting asset base, losing some capital in the coming months.
Similar to a covered call, but it's the flipside. So it's the sell side. Most people don't understand how puts work, and with the put write you're getting a very complicated strategy. He'd recommend something more conservative, such as covered calls because they're a lot easier to understand.
They write puts and buys good companies at lower prices and sells high. He would cycle out of ZPH and ZPW to ZPAY which generates a rate of around 6% but with a better strategy.
Is a put-write strategy. They sell puts to generate income on the market. Technical/chart analysis does not work, because most of the return comes from income. This ETF is meeting its goal, despite the down-up chart of recent years. There is also PUTW in the US worth looking at.
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ZPH and ZPW way to extract yield from the market without taking a lot of risk. They have been okay but not great. ZPAY is a better way to benefit from the same strategy.