cause i understand your views but do not agree. In your 1st paragraph you say the new fund is no "different from outright holding the bank's stock."
here i disagree. The bmo fund's return is double that of the average dividend or more. To equal, bank stocks would have to continue to appreciate by at least 4-5% per annum, year after year. No certainty of this whatsoever.
like any long-bank-short-call position, the bmo strategy will return approximately 9-9.5% per annum in 3 out of 5 markets, and thus it will better a plain stock position. The 3 are stable (unchanging) markets, moderately falling or moderately rising markets. Plain stock will suffer, compared to an optioned position, in stable or falling markets; and may not rise as much as the option return will offer during moderately rising markets.
turning now to the 2 much rarer & extreme scenarios, an option strategy will not do any worse than plain stock in a market collapse; while it will equal or very slightly underperform plain stock in a fiercely strong bull market, the kind we might see only once a decade or less.
with odds like that, and viewed from the perspective of a decade or more, the option strategy is more appealing imho.
specifically, the bmo strategy is not quite the strategy that i favour or practice myself. I tend to sell less aggressive options, ie farther OTM. This means 1) my current cash return is slightly less than than bmo's; 2) my risk of assignment is less than bmo's; and 3) my participation in rising markets is greater. Another way of analyzing this is to say that my current return includes less actual or realized capital gains (lower option premiums) while deferring more notional or paper capital gains into the future.
the bmo approach means selling calls that are closer to the money. These bring in more cash, which is what appeals to investors. The ATM premiums also trigger more frequent assignments.
turning now to your TD example, the doubling in this stock occurred relatively slowly, over a fairly long period, which was the past 2 years. Yes i've held td throughout. Yes my stock has doubled. No i've never been assigned. What i did was adjust my options judiciously, from time to time, as the months & years passed. In short, i held & still hold a stock that has doubled, i've collected the dividends & i've also collected premiums from selling a succession of calls along the way.
a relatively inexperienced option trader often assumes that he is locked into exercise if he writes a call & the stock rises. In reality, however, he will have many opportunities to adjust his position, to dance with the market.
it's true that canadian bank options are slow, stout & ponderous dance partners. But what can one do. It's either dance with the dowagers or head south to look for the nubile young things. And i belong to the school that says rich dowager aunts like canadian banks are a mainstay in every canadian investor's family.