SLV - SLVO: Why Covered Calls Are Not The Right Approach To Silver
2024-01-29 12:53:04 ET
Summary
- A covered call strategy involves owning an asset and selling call options, benefiting from modest price increases but resulting in losses during extreme price moves.
- Silver has traded in a narrow range since 2020, with the range narrowing further in 2024.
- The Credit Suisse X-Links Silver Shares Covered Call ETN has underperformed silver futures and experienced losses in recent years, making a direct investment in silver or a self-directed covered call strategy more favorable.
A covered call strategy involves owning the underlying asset and selling the same quantity of call options to collect option premiums. If the asset price rises above the call option strike price, the covered call strategy sells the asset at the strike price. If the price is below at expiration, the call option expires, and the owner of the asset can sell another call option....
SLVO: Why Covered Calls Are Not The Right Approach To Silver