BMO Covered Call Canadian Banks ETF (ZWB-T)

Basket of Canadian banks. Getting the yield from the banks, and overlaying an option premium on top of that. With the covered call, there's the risk of the ETF portfolio being struck out of its holdings too early. If you need the income, then a covered call strategy may make sense. If you don't need the income, don't get attracted by the yield itself.

Often the underlying securities perform better than the ETF. See ZEB.

If he was going to own national banks, he'd most likely own RY or NA. And if not, then the ZWB strategy is a good one; covered calls give you more upside; yield's around 7.5%; pretty good income stream.

Not a ton of growth in the Canadian market, and not a ton of growth in Canadian banks. Own them for the income more than upside growth.

He's been using this to substitute very low interest rates for years. He buys this consistently for years, but recently sold it because with interest rates it's better to buy T bills or ZEB.

Bank stocks with an overlay of covered calls, which gives you a pretty tax-efficient yield of 7.4%. Canadian banks have been recovering a bit. Especially with rates moving down, dividend payers should improve a bit. 

Investors are attracted to the yield. The buffer zone of the yield can minimize volatility, however you'd get a better total return just owning the underlying banks. Makes sense if you need the income, but you're paying that MER and total return might be less.

He's not familiar with the Brompton strategy, but can only surmise that they're writing calls at the money, rather than out of the money. Or they're issuing return of capital to push the yield higher, until something goes wrong.

Depends on whether you're looking more for growth (individual banks) or for income (ETF). Also depends on what bank you're looking at and your timeframe. The covered call generates a bit higher income, but that could limit upside a bit if banks are running up.

Recently, TD and BMO have disappointed. Might be a buying opportunity. 

Good defensive product for investors. Dividend is safe and reliable. Don't expect large capital gains from this product (covered calls remove high growth). 

This one from BMO is one of many with a covered call strategy that will give you a good income. Peruse the BMO covered call offerings in utilities, banks, or the index as a whole.

Owns a lot of this. Pays a good return. However, buy ZEB (no covered call) if you believe the banks will recover.

Investors should be prepared for weakness in economy. Mortgage rates could add weakness to consumers. Would wait to buy this product. 

Would recommend buying in tranches to reduce risk. Good investment if believe bottom in banks. Could be a good time to start nibbling. 

Getting close to price that offers value to investors.
Recent share price weakness a good time to buy.
Quality names in Canadian banking sector.

If volatility is high - good to own.
If bullish on economy - better to own pure play bank stocks.
Economic weakness ahead, so better to own ZWB. 

Covered call writing strategy.
No leverage.
Beneficial to get professional advice on sophisticated product.
Vague on buying strategy.

Our favourite covered call ETFs involve underlying assets that have a history of appreciating over time. For that reason, we like is the BMO Covered Call Canadian Banks ETF (ZWB). It has a 7.5% distribution yield, a higher AUM of $2.9B, and over the past 10 years it has returned 8.1% annually with distributions reinvested.

For investors seeking monthly income, covered calls can be a good approach, however, for the average investor we do not typically like the cap on price appreciation that covered call ETFs have, and for an uptrending market, we would prefer to own the underlying assets outright rather than covered calls.
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Canadian banks are a core holding for him. Covered call boosted the yield in his portfolio.