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Credit Suisse ETN's
Posted on 6/3/15 at 6:54 am
Posted on 6/3/15 at 6:54 am
Quite a few sophisticated persons on here who seem to be in the investment banking industry. It will be interesting to see if I can get some insight to this question.
I'm looking for what pitfalls I might encounter by going long on an exchange traded note. I understand credit risk of issuers, and generally higher expenses associated with these. Interesting since the bank's cost would have to be lower due to their structured product infrastructure already in place, but I'm willing to pay this expense as the products I'm looking are a covered call strategy and I would have monthly expenses, and more importantly extra work if I tried to replicate this myself.
Edit. I actually think buying these are a bad idea, but would like to hear experts take on it.
I'm looking for what pitfalls I might encounter by going long on an exchange traded note. I understand credit risk of issuers, and generally higher expenses associated with these. Interesting since the bank's cost would have to be lower due to their structured product infrastructure already in place, but I'm willing to pay this expense as the products I'm looking are a covered call strategy and I would have monthly expenses, and more importantly extra work if I tried to replicate this myself.
Edit. I actually think buying these are a bad idea, but would like to hear experts take on it.
This post was edited on 6/3/15 at 7:08 am
1
Posted on 6/5/15 at 8:11 am to Iowa Golfer
quote:
Quite a few sophisticated persons on here who seem to be in the investment banking industry. It will be interesting to see if I can get some insight to this question.
I'm looking for what pitfalls I might encounter by going long on an exchange traded note. I understand credit risk of issuers, and generally higher expenses associated with these. Interesting since the bank's cost would have to be lower due to their structured product infrastructure already in place, but I'm willing to pay this expense as the products I'm looking are a covered call strategy and I would have monthly expenses, and more importantly extra work if I tried to replicate this myself.
Edit. I actually think buying these are a bad idea, but would like to hear experts take on it.
The only other real risk is CS no longer issuing shares of the ETN (I've seen JP Morgan do this with AMJ) and the ETN begins to trade at a premium to the NAV of the underlying index. Other than that your only risks are credit and expenses.
Posted on 6/5/15 at 8:39 am to whodatigahbait
Thanks. I get confused about notes. I can't imagine they track as well as the underlying either, but I think both GLDO and SLVI would have to track a little better than most if it is indeed a covered call strategy.
I have a nagging feeling that I'm missing something obvious with these two.
I have a nagging feeling that I'm missing something obvious with these two.
Posted on 6/5/15 at 8:44 am to Iowa Golfer
quote:
Thanks. I get confused about notes. I can't imagine they track as well as the underlying either, but I think both GLDO and SLVI would have to track a little better than most if it is indeed a covered call strategy.
I have a nagging feeling that I'm missing something obvious with these two.
In theory they should track exactly the underlying (minus expenses), because remember they are promising you the return of the index and what they do with the money is their business which is the credit concern comes from.
Posted on 6/8/15 at 7:05 am to whodatigahbait
I'm not going to do this with Credit Suisse. They have a history of behaving in a manner that is detrimental to their customers. I wish there was an easier way to do a covered call trade on gold specifically. Silver wouldn't be as important as the two metals are really different from a demand and income producing view.
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