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  5. ZUT: UMAX = covered call, UTES= covered call + 1,25% leverage. [BMO Equal Weight Utilities Index ETF]
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Q: UMAX = covered call, UTES= covered call + 1,25% leverage. In a downtrend, UTES would probably go down around 25% more than umax (ex -10% vs -12,5%...) and ZUT.Since the markets are presently high +the economics, do you believe that there could be a significant probability of a downtrend in 2025 and in such case ,would it be safer to sell UTES for ZUT now (or another stock), in order to reduce the risk ?
Asked by Jean-Yves on September 03, 2025
5i Research Answer:

Keep in mind ZUT does not sell covered calls. In a downturn, call option premium will provide a small cushion in declines. UMAX utilizes in-the-money call options as well, so its cushion should be slightly larger than UTES, even before considering the use of leverage. So, in a downturn, on the assumption that similar securities are owned, UMAX may hold up better than the other two.