This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New Silver ETN Offers High Income Potential

The SLVO fact sheet at the Credit Suisse Web site notes that based on the first dividend payout, the yield annualizes out to 12.63%. Any future dividends will be based on future call premiums, which are not knowable. The yield could be more or less than 12.63%; it all hinges on future call prices.

Another critical point of understanding is the exchange-traded note structure. ETNs are unsecured debt obligations if the issuer, in this case Credit Suisse. Standard & Poor's currently rates Credit Suisse's long term debt at A+ with a negative outlook. A failure is of course unlikely, but if it happens, note holders could be wiped out.

The role of SLVO in a portfolio would be as a holding in tandem with the more-standard SLV exchange-traded fund. (Investors can make similar combined purchases of GLDI and GLD.)

To the extent that precious metals offer a form of insurance, putting a portfolio's entire precious-metals allocation into a fund that caps the upside (such as GLDI or SLVO) isn't ideal.

Instead, investors could consider a 50/50 split between the traditional fund and the call-writing cousin.

This would create some income and allow part of the position to run in the face of large, fast moves in the underlying metals.

At the time of publication, Nusbaum's firm held shares of GLD on behalf of clients.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SLV $14.08 -0.07%
GLD $104.93 0.63%
GLDI $10.80 1.11%
SLVO $10.15 0.10%
AAPL $121.30 -0.87%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs