User Persistence for a covered call RR pays off. Much appreciated for the episode. Money saved for all who listened.

Patrick is one of my favorite content creators. You should find an excuse to have him on the podcast, even if it's to discuss the finer points of using memes in financial education.

One of three. Thank you. I am grateful for the continued education that many times leaves me well outside my understanding but leaves me wanting to learn more.

I really liked the part of the covered call segment when you discussed how writing options changes the distribution of returns. It made perfect sense and gave a mathematical framework for what I knew intuitively but did not know how to express with any kind of mathematical rigor.

In the US, covered calls are not only taxed as ordinary income, but dividends received from the shares covering the call can't be claimed as qualified dividends, so you pay ordinary income rates on dividends too (see IRS publication 550). Under normal circumstances, dividends can at least be taxed at capital gains rates.

This podcasts are very informative and a pleasure to listen to. Great guests makes it even better. Thank you!

Awesome work Ben.

I always thought of covered call strategies as good for sideways or down markets, bad for up markets. Assuming the market goes up long term you should expect the strategy to underperform? Definitely would want to hold them in a Roth. edit- just got to the part where you said it outperforms in flat markets :)

Thank you, I enjoyed the video and learned a thing or two. In particular I'm now making my own "Death Box."

What an energetic host 😮

One of the scenarios that might be considered: Expected returns and an investor that believes in volatility and limited upside returns, investing in JEPI in a retirement account. Not sure how different it is in Canada, but a cost of 35 BPS in an actively managed ETF, plus the elimination of tax considerations (by using retirement accounts) during choppy markets has been working well over the past 12 months. Of particular note for retirees is the monthly dividend provided by some of the covered call ETFs.

Ben, we all understand things differently, but I really only got the impression that covered call etfs are bad and expensive without understanding why. On your KZread channel, you are an excellent teacher because you use graphics to explain your more complex terms or concepts. I hope you eventually do this again on your channel where I hope to fully understand everything you meant to say.

@rationalreminder

Жыл бұрын

The main points are: - Covered calls do not generate income because options premiums are offset by the liability of selling the underlying below market value. - The Sharpe ratio is not an adequate measure of risk-adjusted returns due to the skewness introduced by options. When accounted for properly, the risk-adjusted returns are nothing special. - In exchange for nothing special, you pay higher fees, costs, and taxes.

@ryanm7171

Жыл бұрын

@The Rational Reminder Podcast Thanks for trying to explain things to me. I will look up what a Sharpe Ratio means. Is a covered call ETF the exact same as a leverage ETF, a type of leverage, or not at all? I have heard other KZread channels interview the manager of the Hamilton ETFs saying their leverage ETFs were superior to standard covered call ETFs because they use leverage. It's all a little confusing, but you were right about the BMO Covered Call Cdn Bank ETF. I bought it years ago but made much less total return than if I had bought just the BMO Equal weight Cdn Bank ETF.

@rationalreminder

Жыл бұрын

@@ryanm7171 covered call ETFs are totally different from leveraged ETFs. Due to the fact that covered call ETFs have lower equity betas they will often be leveraged to increase their equity beta. Sharpe ratio is just a measure of risk-adjusted returns that uses standard deviation as the measure of risk. Standard deviation does not fully capture the risk of covered calls due to skewness which is a problem for people who are not aware of this.

@ryanm7171

Жыл бұрын

@The Rational Reminder Podcast Thank you so much for making everything make a little more sense now. Your audience is really knowledgeable in the area of finance, and they understand everything you say. Unfortunately, there are a few of us like me who aren't quite as advanced and could use a little extra explanation. I appreciate that you sometimes have to choose to speak at the level where the majority of your audience is at. Too bad for me, you attract such a smart audience, but I suspect it must help also attract such intelligent, interesting, and informative guests.

Love you two! Im curious if you think horizon swap etf products are good for long term compounding.

@rationalreminder

Жыл бұрын

We are in the process of updating our due diligence and will report back.

🤘

It really depends on how aggressive the call write strategy is. A DIY investor can sell calls way out of the money with short expirations for income without risking assignment.

@justinmathis8078

6 ай бұрын

I agree. A lot of covered call writers are greedy!

Condinasion congreso

Your take on the "Income being misleading" is misleading itself. The income generated isn't misleading, it is actual income. Foregoing the higher returns from underlying assets is true but thats a different story. You cant claim that the income generated from the premium isn't actually income, it is income nonetheless.

The objective is income, not necessarily to outperform a benchmark, although the vast majority of Covered call ETFs out there tend to write covered calls on no more than 50% of the ETF, the other 50% is just like a regular ETF.

@rationalreminder

Жыл бұрын

One of the main points made is that they don’t generate income since option premiums come with a liability.