(New York)

Covered calls are an old investing methodology, but one that does not get much attention. That said, employing covered calls can be a great income strategy. So what is a covered call? Simply put, it is the process of selling call options while simultaneously holding the underlying shares. The idea is to earn income from selling the call options, while hedging risk by holding the underlying shares. The ideal outcome is that the underlying share price rises but does not hit its strike price, yielding the seller both the income from selling the option and the capital appreciation of the shares.

FINSUM: In markets with big momentum this is not a great strategy, but in back and forth ones like those at present, it can be very effective for increasing income. There are a number of funds that also employ this strategy so you don’t have to do it manually.

(Washington)

Markets are having a tough time right now on news of surging cases across many parts of the US. In what has become a typical cycle, optimism on the recovery is being tempered by media reports of surging COVID cases in several states. The markets seem to be unusually wounded this morning, and the reason might be comments from Coronavirus Task Force chief Anthony Fauci. Speaking about the rise in cases, he called it a “disturbing surge” and warned congress that the virus was not under control.

FINSUM: The rise in cases in Florida, Texas, California, and Arizona has been alarming, especially in the last week, so markets are starting to worry about the potential for new lockdowns.

(New York)

COVID has affected the wealth management business as deeply as any other industry. Disruption has arrived, but opportunity has also come with it. But how will it impact the recruiting environment? By all accounts, it looks like the next six months or so will be an ideal time for advisors to move networks/companies. Firms are loosening purse strings and are jumping head first into recruiting again as periods of upheaval like COVID have usually led to increased movement among advisors. That means advisors are likely to get bigger checks for moving now than they would have earlier this year. The lack of conferences also means they are putting more money into other efforts to reach advisors.

FINSUM: Generally speaking, the COVID environment seems to have been beneficial for advisors. New efficiencies and work/life balance have been found as a result of working from home; deeper bonds with clients have been formed during the crisis; and there are increasing opportunities for recruiting. The speed of the market recovery has also been beneficial.

(New York)

There is alarm growing among muni bond investors as credit quality continues to deteriorate. During COVID there has been a widening gap in pension deficits among municipalities, and investors are keeping a close eye because it is leading to deferred pension payments. This is troubling for a number of reasons. Firstly, it digs municipalities into a bigger hole because they must pay interest on deferred payments; and secondly, it spooks bond markets and makes it harder for them to access liquidity. In other words, deferred pension payments, such as the nearly $1 bn one New Jersey elected to do in May, dig muni issuers into a deeper and deeper hole.

FINSUM: Pension recipients are very likely to be considered senior to bondholders, so this is a very alarming situation for investors.

(New York)

It might be obvious if you are paying close attention to the stock market, but today we are covering a list of the top performing stock/companies during COVID. Most of the names are what you would expect, but there are a few surprises. No one would be surprised to see Amazon and Microsoft atop the list, with Tesla, Facebook, and Alphabet all in the top ten, but how about PayPal and Shopify (numbers 9 and 15 respectively). Zoom is also in the top 15, but Audi and Home Depot are also in the top 25. Salesforce is number 33.

FINSUM: Certain companies have boomed under COVID for a variety of reasons, and looking at a consolidated list is a great way to get a perspective on what is performing well.