SLVO ETF

SLVO offers high monthly dividends through a covered call strategy but caps upside potential, making it less ideal during strong silver rallies. Despite a bullish outlook on silver, SLVO's structure and historical underperformance suggest direct investments like SLV or self-managed strategies might yield better returns. SLVO's 32% yield is appealing for income-focused investors, but its expense ratio and capped gains limit its attractiveness for those seeking significant capital growth.

I'm bullish on Silver, due to its fundamental setup, highlighted by a 6-year running supply/demand deficit. Despite my bullishness on Silver, I'm bearish of the Credit Suisse X-Links Silver Shares Covered Call ETN due to its long term under-performance. On the surface, the SLVO ETF's shareholders get a 14% dividend payout. Yet, the total return of the fund since inception has been negative for more than 11 years.

In 2024, there have been notable increases in commodity prices, such as oil, coffee, gold, and cocoa. The Credit Suisse X-Links Silver Shares Covered Call ETN allows investors to access silver but limits potential gains to +6% during monthly positive movements. Given the unpredictable and rapid nature of commodity rallies, the SLVO structure may not be suitable for unexpected surges in silver prices.

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.

SLVO is a choice for investors seeking additional income through covered calls on silver prices. The article questions the practicality of SLVO despite its theoretical advantages. The high cost of SLVO undermines its potential benefits, making it less appealing in practice.

The Credit Suisse X-Links™ Silver Shares Covered Call ETN offers a strategy of selling covered calls on silver to take advantage of its high implied volatility. The ETN's return is linked to the Credit Suisse NASDAQ Silver FLOWS™ 106 Index and offers a monthly variable cash coupon based on option premiums received. We tell you why the yield is imaginary and how you could do better.