BMO US Put Write ETF (ZPW.TO)

He loves the strategy of just taking in premiums with options. You could go out 6 months and write a put and then if it comes down in the next 6 months you buy it at the price you want. You are always taking in a premium and then you own the stock at the price you want. There is no ETF that does that strategy. This ETF gets rid of stocks as soon as they are put to them. In a taxable account this is income, because it is a naked write.

US Market ETF. You have exposure to the US dollar. The .U version trades in US$ on the TSX vs. ZPW-T trades in Canadian dollars. They are identical otherwise. They both have exposure to the US. He is the biggest holder of the ETF in Canada.

Writes put options to generate extra income. It is not the same as covered calls. This is a good way to do put writes. The risk is that if the market goes down you end up having to buy a bunch of stocks.

Put Write ETF taking a basket of high quality US stocks and writing naked puts. It takes the yield from that to pay a nice yield on the ETF. This one was his idea and he is the single largest holder of it. It is a conservative way to get more yield. It is a defensive holding for yield only.

Put writing is a strategy that a lot of advisors use. Instead of writing Covered Calls they write Puts, so while sitting with cash, they collect a little bit of yield. If markets decline a little, and Puts are called, they are forced to buy the stock at the strike price. This ETF is the same thing. The markets do decline, you will participate. It is not really a fixed income investment. It doesn’t protect you from the downside, but is a method of obtaining a bit of income from the market if you have a kind of range bound view, or even if you are a little bit bullish. It could be a unique way to generate yield, and also as a tax efficient way as Puts are not taxed as regular income.

(Market Call Minute.)

He has been building a big position in this one. It is near its 52 week lows because it only came out last September. It is based in US dollars and that has driven it recently. 30-40 high quality US companies with naked put options being written. It is a great diversifier in a yield based portfolio with an uncorrelated return.