Hello everyone, One criticism I frequently see on this platform about income investing, particularly covered-call ETFs, is that investors sacrifice gains once the underlying stock rises beyond a certain point. It feels counterintuitive. Yet, my observations seem to challenge that assumption, at least over shorter periods. In the attached screenshot, $AMD was up 8.80% as of 3:44 p.m. ET today, while $AMDY was up 12.95% at the same time. If covered-call ETFs cap upside participation, how can AMDY beat its underlying stock today? I'd genuinely appreciate an explanation from anyone familiar with the mechanics behind this. Cheers, A.
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29 Comments
Hugo Leblanc@hugoboss123 · 4d
Nothing beats getting paid every month and not selling any stocks. Who cares what they do…
Jonoosh @jonoosh · 4d
TSX (which is where AMDY is traded) was closed yesterday for a holiday but the US market was open. So the change for AMDY is a combo of movement from yesterday and today.
Scott S@scottsinvesting · 4d
The Toronto listed $AMDY CC ETF is leveraged by 25% cash, essentially meaning it’ll move 1.25x in both directions, but not a perfect correlation on any given day… My description is very simplified and not perfect, but explains the daily outperformance.
rob @thatguyrob · 4d
Amdy has leverage. I think it's 25%.
Kar Yung Tom@karyungtom · 4d
$AMDY has 25% leverage, so it's not a direct comparison.
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