In April 2008 Investment Enhancing Systems, Inc. began publishing a Exchange Traded Funds (ETFs) list. Each month on expiration weekend (the third weekend of the month) we run the Covered Call Analyzer using our default parameters and publish a list of the first ten (10) ETF/call buy/writes that are identified by the Analyzer.  We have done this with education in mind. Our objective is to help the investor understand how to use ETFs with covered calls and what to do if the ETF does not get called or tanks. We publish our results here. Many of our customers run the Analyzer, with their own parameters and make their own selections, or select ETF/call combinations from our list.  

We assume that there is $10,000 for the purchase of each ETF listed (purchased in lots of 100 shares).  In some cases we spend much less to purchase the ETF. If the ETF costs $35.00 we can only buy 200 shares of the ETF and the cost is only $7000 plus commissions.

Our objective is to have the ETF called in the next month, but that doesn't always happen.  It then becomes necessary to decide whether to sell more calls for the next month, hold or sell out.  We establish a get-out price at -15% and sell the ETF if it drops 15% below our purchase price. Because the ETF purchased is "covered" by the sold calls, we must buy back the call contracts before selling the ETF at the get-out price. The buy-back of the calls is usually at a much lower price than what they were originally sold for, producing some premium against the drop in ETF price. We strongly recommend establishing a get-out price and then sticking to it.  

Results for each month are determined by calculating:

         " Total Dollar Return when the ETF is Called" (call income [not at risk] plus ETF price appreciation to strike price, including commission effects).

         " Change in Value of ETFs Still Held" (value of ETF not reaching strike price plus call income, including commission effects)

There are good months and bad months, but overall for the year, the Covered Call Analyzer produces good returns.  Results, shown in the above table, are updated each month on expiration weekend until all positions are closed out.  Click on a month to see the detail of how each "ETF-to-Consider" was handled. Remember, PATIENCE pays off. 

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