Madison/Claymore Covered Call Fund (MCN)

All Comments on MCN

  • commenter
    Roger
    Nusbaum
    May 30 07:26 PM
    My Website
    BuyWrite ETN (BWV): A Buy -- If It Can Track The Index [view article]
    Barclays thinks so of course but I have not found any commentary from disinterested third parties that feel likewise. I should also note that I haven't found any commentary that says Barclays is wrong either.

    So basically no help here.     Reply
  • commenter
    JohnB
    May 30 05:14 PM
    BuyWrite ETN (BWV): A Buy -- If It Can Track The Index [view article]
    Very interesting new security!

    Regarding the lack of dividends, I understand the fund will seek to retain its income so it may be treated as capital gains. Does that look like a safe tax treatment and will it pass muster with the IRS?     Reply
  • commenter
    leojbourne
    Apr 26 11:18 AM
    Assessing Closed-end Call Writing Funds (CEF: MCN) [view article]
    Writing covered calls on stable stocks can generate nearly 1% per month if calls are sold at relative high points on a chart. While it is true that upside potential is curtailed, buy-and-hold investors in large cap stocks shouldn't care. If a stock is called away, there may be capital gains, but that same stock can be repurchased later with the proceeds on a dip. With low beta stocks, writing covered calls is essentially underwriting the speculation of others. I don't see how the passthrough of covered call premiums to CEF shareholders reduces the NAV, since NAV is based on stock holdings and proceeds of sales. Writing in-the-money (ITM) covered calls could indeed reduce NAV, but this would be a poor strategy, since in a rising market there is greater return on slightly out-of-the-money (OTM) calls. In a falling market, writing ITM calls will not stop erosion of NAV in terms of holdings, but will offset it through distribution of cash from premiums. So the strategy seems ok to me. However, since several others have commented on NAV erosion from CEF covered call writing, I must be missing something. Reply
  • commenter
    Girish Shah
    Mar 25 10:16 AM
    No Free Lunch with Covered Call CEFs [view article]
    Your comment has made the MOST sense too me. I agree with you. You just saved me a lot of money. Reply
  • commenter
    Marius
    Ciuzelis
    Jan 21 05:34 PM
    Exchange-Traded Funds and Closed-End Funds by Asset Class, Type and Provider [view article]
    anything for Vietnam? Reply
  • commenter
    Chamois16
    Nov 05 07:26 AM
    Further Thoughts On Call-Writing Closed-end Funds (BEP, FFA, IGD, JPZ, JSN, MCN, NFJ) [view article]
    I'm not an options expert, but believe some of the basic premises in the argument are false. Options do not need to be priced inefficiently to "earn" a total return above the distributions; one does not need to rebuy the original stocks called away, and many CEF deal in index options, which are settled in cash when exercised, rather than by the exchange of shares. Strike prices, as has been mentioned, can be set to reflect targets.

    The options writing CEF I follow have done as well as, or better than, expected, with NAV total returns well in excess of total distributions. NAI, for example, about twice as well in NAV total return with an NAV gain of over 10% net of distributions.

    To debate whether the distributions are true dividends, if I understand the comment, is somewhat moot, since they are not dividends as defined by the ICA 1940, the SEC or GAAP, when portions include capital gains a/o other return of capital. Only in tax terminology can distributions be considered dividends and then not always.

    I believe that whether a CEF makes sense or not as a concept depends largely on management. In this case, it probably depends more on the options advisor than on the stockpicker, usually separate teams.     Reply
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