Covered call writing results can be enhanced through the use of leveraged ETFs and margin accounts. However, so too is the risk elevated. In this article, the pros and cons of these strategies are examined. Definitions Leveraged ETF: An exchange-traded fund (ETF) that uses financial derivatives and debt to magnify the returns of an underlying index. Margin account: […]
The Mechanics Of Leveraged Exchange-Traded Funds: Appropriate For Covered Call Writers?
Our premium members receive a weekly report of exchange-traded funds (ETFs) appropriate for covered call writing. These lists will never include a leveraged ETF because we feel that these securities are too risky and suitable only for sophisticated investors with high risk-tolerance. In this article, I will break down the mechanics of how leveraged ETFs […]
Complex and Leveraged Exchange-Traded Funds
With more and more Blue Collar Investors using online discount brokers as their trading platforms the need to be aware of the risks of complex and leveraged exchange-traded funds has become critical. Buyer beware! Covered calls can be written on many of these securities but is the risk justified? First let’s review some definitions previously discussed […]