Re: Covered Call ETFs - A starting point
Thanks for your reply and analysis. I still have several basic questions about covered call funds, as I'm looking for retirement income (at a reasonable risk):
1. Why should I worry about whether one of these is selling at a premium or discount to its NAV - will the NAV only come into play when/if the fund terminates? When I do my taxes, I base my gain/loss on what I paid for the fund vs what I sold it for, not the NAV (unless I'm completely wrong).....
2. If these are "covered" calls, doesn't it mean the fund has already bought the stock/index/ETF (probably at a lower price)? If so, and they have to sell (due to someone exercising their call, there will be a capital gain - is that passed on to the shareholders?
3. You've mentioned how these funds have acted during the last couple of years, but with the fear of interest rates increasing (I may be wrong, but I think this fear is overdone currently) and the yields going up, any idea how these might act in that type of a market (increasing interest rates)?
4. You suggested that I concentrate on discounted covered call funds - do you have a suggestion/link where I can determine whether a fund is selling at a premium/discount?