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AdvisorShares STAR Global Buy-Write ETF

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The fund is an actively managed exchange-traded fund (ETF) that is primarily a fund of funds. It invests in ETFs and exchange-traded notes (ETNs) that seek to track a diversified basket of global indices and investment sectors that meet certain selection criteria established by Partnervest Advisory Services, LLC (the Sub-Advisor). It also may invest, subject to the same selection criteria, in exchange-traded products that invest directly in commodities or currencies and that are registered only pursuant to the Securities Act of 1933 (collectively with ETFs and ETNs, ETPs).

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VEGA

Income and Appreciation with Covered Calls 

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Benzinga&#39;s Mandatory ETF Reading for September 24, 2013

Vega Protocol - United States Dollar

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A strategy that involves exposure to the stock market, as well as generating monthly income, sounds like a great option in the current market environment. The covered call strategy, also referred to as a buy-write strategy, involves buying shares of a stock and selling a call option against the position.

	It can be used to lower volatility and generate income while at the same time keeping exposure to the stock market. There is a downside risk to the strategy, that involves a strong bull market. If the stock moves above the strike price on the call option that was sold against the stock, it will limit the upside potential of the stock. In essence, an investor is putting a limit on the gains in exchange for monthly income from the option premiums.

	In the situation where the strategy takes too much time or is too complex for the individual investor, there are ETFs that focus on the covered call strategy:

	PowerShares S&amp;P 500 BuyWrite (NYSE: <a class="ticker" href="/stock/pbp#NYSE">PBP</a>). This ETF is based on the CBOE S&amp;P 500 BuyWrite Index that holds a portfolio of stocks that tracks the S&amp;P 500 and sells call options at or above the prevailing price of the index. The current yield on the ETF is 6.5 percent and it is up 5.9 percent this year. A recent rally has the ETF trading at the best level since June, as interest rates have once again started to increase. As interest rates rise it makes the income generated by the covered calls more attractive. The expense ratio is 0.75 percent.

	iPath CBOE S&amp;P 500 BuyWrite Index ETN (NYSE: <a class="ticker" href="/stock/bwv#NYSE" style="font-size: 13px;">BWV</a>).&nbsp;This ETN tracks the same index as PBP with one major difference -- being how they achieve their objective. With an ETN, the product will use various financial vehicles to track an index, versus actually owning the stocks that make up the index. Therefore the risk lies on the issuer of the ETN, in this case Barclays&nbsp;(NYSE: <a class="ticker" href="/stock/bcs#NYSE">BCS</a>). The expense ratio is 0.75 percent and the ETN is up 11.3 percent in 2013. There are no distributions made by the ETN.

	Horizons S&amp;P 500 Covered Call ETF (NYSE: <a class="ticker" href="/stock/hspx#NYSE" style="font-size: 13px;">HSPX</a>).&nbsp;Introduced in late June of this year, HSPX will track the same index as the first two covered call ETFs. The expense ratio will be slightly lower at 0.65 percent. The dividends are paid on a monthly basis, versus quarterly for PBP. Based on the erratic first four months of dividends the ETF is yield just under 4 percent. This yield is expected to vary greatly from month to month.

	AdvisorShares STAR Global Buy-Write ETF (NYSE: <a class="ticker" href="/stock/vega#NYSE" style="font-size: 13px;">VEGA</a>).&nbsp;The actively managed ETF uses a proprietary strategy, that invests in a global allocation strategy and simultaneously sells call options against them. So far this year the ETF has been lagging the market as it is currently unchanged in 2013. Based on last year&#39;s one distribution the ETF is yielding less than one percent -- and on top of the 2.1 percent net expense ratio there is no reason to look any further into this vehicle.

	Of the four options, three are tracking the same index -- and the two that appear to be the best options for investors are PBP and the newly introduced HSPX. &nbsp; &nbsp;

Big winners (up at least 5%): VelocityShares 3x Inverse Natural Gas ETN (NYSE: <a class="ticker" href="/stock/dgaz#NYSE">DGAZ</a>), iPath Global Carbon ETN (NYSE: <a class="ticker" href="/stock/grn#NYSE">GRN</a>), ProShares UltraShort DJ-UBS Natural Gas (NYSE: <a class="ticker" href="/stock/kold#NYSE">KOLD</a>) and the ProShares MSCI UltraShort Mexico (NYSE: <a class="ticker" href="/stock/smk#NYSE">SMK</a>).

	Big losers (down at least 5%): ProShares Ultra DJ-UBS Natural Gas (NYSE: <a class="ticker" href="/stock/boil#NYSE">BOIL</a>) and the VelocityShares 3x Long Natural Gas ETN (NYSE: <a class="ticker" href="/stock/ugaz#NYSE">UGAZ</a>).

	Unusual volume (at least 5X ADV): SPDR S&amp;P Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/gmm#NYSE">GMM</a>), iShares MSCI Germany Small Cap ETF (NYSE: <a class="ticker" href="/stock/ewgs#NYSE">EWGS</a>), ProShares UltraShort MSCI Emerging Markets (NYSE: <a class="ticker" href="/stock/eev#NYSE">EEV</a>), Market Vectors Russia Small-Cap ETF (NYSE: <a class="ticker" href="/stock/rsxj#NYSE">RSXJ</a>), ALPS Sector Dividend Dogs ETF (NYSE: <a class="ticker" href="/stock/sdog#NYSE">SDOG</a>) and the AdvisorShares STAR Global Buy-Write ETF (NYSE: <a class="ticker" href="/stock/vega#NYSE">VEGA</a>).

	Must reads of the day:

	WSJ: Finally, relief for <a href="http://online.wsj.com/article/SB10001424052702304713704579094683552823954.html?mod=pls_whats_news_us_business_f">the once hot rare earths sector</a>.

	MarketWatch: These <a href="http://www.marketwatch.com/story/the-days-of-easy-money-may-be-over-2013-09-20?link=sfmw">countries look cheap</a> and there are plenty of ETF options with which to play that theme.

	iShares: Asset allocation strategies <a href="http://www.blackrockblog.com/2013/09/23/feds-surprise-4-asset-allocation-implications/">for a no tapering world</a>.

	Courtesy of GrahamFisher, by way of The Big Picture Blog, <a href="http://www.ritholtz.com/blog/2013/03/jpm-out-of-control/">you must read this</a> if you own bank ETFs or shares of JPM.

	ETF Trends: Banks showing <a href="http://www.etftrends.com/2013/09/in-a-no-tapering-world-banks-love-emerging-markets/">emerging markets the love</a>.

	Don&#39;t forget about <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/09/3938685/vietnam-etf-could-offer-a-year-end-surprise">opportunities with the Vietnam ETF</a>.

	For income investors: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/09/3938350/two-etfs-for-global-yield">More international dividend ETFs</a>.

	Don&#39;t forget to follow me on Twitter <a href="https://twitter.com/ETFProfessor1">@ETFProfessor1</a>.

Benzinga's Mandatory ETF Reading for September 24, 2013

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Latest AdvisorShares STAR Global Buy-Write ETF News | ARCA:VEGA | Benzinga

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