By Lawrence G. McMillan
A new ETF by Credit Suisse, trading with the symbol GLDI, is called the “Gold Shares Covered Call ETN." The product will hold a long position in GLD (the Gold ETF) and sell one-month out-of-the-money calls. The process is complicated and not at all straightforward.
It would behoove a prospective investor to read the prospectus. Essentially, CS sells calls on GLD over a 5- day period; then at the end of the month, they buy them back, selling some GLD shares if necessary, to cover the buyback cost. The cash premiums are paid out to shareholders as a monthly distribution, if there are any. Options are also being traded on GLDI, so you can do a covered write of a covered write if you want!
Get more info on GLDI by visiting Credit Suisse.
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