1Sem.·

Next stage of income investing?

Recently, options-based ETFs have received a lot of attention here in the forum. The best-known providers and funds include:

Global X: $QYLE (-0,52 %), $XYLP (+0,02 %)

JPMorgan: $JEGP (-0,9 %), $JEPQ (+0,67 %)

iShares: $WINC (-0,35 %) , $INCU (+0,52 %)

Now another provider is entering the stage: IncomeShares from the UK.

The first products, $QQQY and $SPYY are now tradable at Scalable:

IncomeShares Nasdaq 100 Options (0DTE) ETP

IncomeShares S&P500 Options (0DTE) ETP

They promise massive payout ratios of 65% and 41% respectively. What's the catch?

For me, many questions remain unanswered, especially about the underlying option strategies, such as the use of ODTE (Options with Daily Expiry).

Presumably these are adaptations of income investing, which is already very popular in the USA and Canada, with providers such as YieldMax, Roundhill and Defiance enjoying great success. It seems that this wave is now spilling over into Europe.

One important point: these products are not ETFs, but ETPs. This could make legal differences relevant.

Among other things, it is unclear to me whether a partial exemption of distributions is possible.

Does anyone already have these products in their portfolio and could share their experiences? I would be very interested to hear reports.

https://incomeshares.com/en/etps/income-shares-nasdaq-100-options-etp/

https://incomeshares.com/en/etps/income-shares-s-p-500-options-etp/

incomeshares.comNasdaq 100 Options (0DTE) ETP | IncomeShares ETPs

34 Commentaires

Tenbagger2024@Tenbagger2024

1Sem.

Personally, I don't consider leverage or options in an ETF/P to be a good instrument. I see an ETF as a long-term investment, and certificates are not suitable for that. I don't understand what the financial world is up to again.

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Yieldrology@Yield-Ahead

1Sem.

@Tenbagger2024 Thank you for your assessment!

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Epi@Epi

1Sem.

@Tenbagger2024 Look at it this way. Index ETFs were initially also intended for professional fund managers and only then gradually seeped into the retail sector.
There are constant innovations, the unnecessary ones disappear, the good ones stay.

These strange option products will be torn apart in the next crash because some risk indicator is out of whack. Like Citibank certificates in 2008 or Vix certificates in 2018. Let the market take its course. 🤷

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Tenbagger2024@Tenbagger2024

1Sem.

@Epi
Thank you, well described. The market will sort it out. It's just a shame for those who lose a lot of money.

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Epi@Epi

1Sem.

@Tenbagger2024 Everyone has to learn the hard way at some point...

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Finanzaristokrat@Finanzaristokrat

1Sem.

You can burn your money more beautifully.

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Yieldrology@Yield-Ahead

1Sem.

@Finanzaristokrat 😂💪👍

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Saschko@WarrenamBuffet

1Sem.

The question is also what they can do better or worse than their Ishares / JPMorgan counterparts...

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Yieldrology@Yield-Ahead

1Sem.

@WarrenamBuffet Yes exactly, good question. The payout ratios are of course extremely high. But how do the prices of these products perform.... in contrast to JPM and iShares?

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Saschko@WarrenamBuffet

1Sem.

@Yield-Ahead Well, the JPMs are also paying out well. The jepq I have myself is already at 8.6 percent. That's also not without ;)

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S.A.U.@SAUgut77

1Sem.

@WarrenamBuffet so with the Global X Nasdaq 100 I am currently at +14% plus 10-11% monthly divi...so strong return 🫠

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Yieldrology@Yield-Ahead

1Sem.

@SAUgut77 Yes, the Global X funds had a strong year, including the S&P 500 variant.

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Oleg@ScorpionfromBW

1Sem.

@SAUgut77 annual divi, not monthly 10-11%. That would be crazy

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S.A.U.@SAUgut77

1Sem.

@Yield-Ahead Well, the S&P variant is not quite as good, but the Nasdaq has done really well and is holding up.

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S.A.U.@SAUgut77

1Sem.

@ScorpionfromBW yes, you're right, but still a great return 😊

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Dividende > Zinsen@GoDividend

1Sem.

He creates new certificates every day and at the end of the month you receive a payout.

Hmm
Then you can also buy certificates yourself on the nasdac-> at least you'll see directly that the money is gone 🤣🤣.

I don't think that's my world.

Maybe something for @Der_Dividenden_Monteur?

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Banana M.@Banana_Millionaire

1Sem.

I have mixed feelings about all these CC ETFs.
In theory, it all sounds quite nice and you even diversify your portfolio a little thanks to the option premiums.
But then there are many "experts" who believe that this plan can never work in the long term.
As I myself am a total loanee when it comes to options, I don't understand all these justifications.
Some say one way and others say another.

So I personally am waiting for the next crash to see how they perform. Especially in the recovery phase, the market is supposed to run away from you. Then it's a case of cutting the distribution or paying it out of the assets.
So far, however, there hasn't been much evidence of this in the minor corrections since launch.

Conclusion:
Watchlist & wait 🙂

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Yieldrology@Yield-Ahead

1Sem.

@Banana_Millionaire I can fully understand your thoughts. I have decided to permanently invest a certain proportion of my portfolio in CC funds. However, these funds will soon be springing up like mushrooms here too. That's why it's perhaps advisable to stick to the funds with the longest history, and these come from JPM.

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Nico@itZNico

1Sem.

0DTE CC ETFs have not done so well so far. I would be happy to see a UCITS-compliant Bitcoin CC ETF.

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TaxesAreTheft@TaxesAreTheft

1Sem.

@itZNico I also think they look very interesting

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TaxesAreTheft@TaxesAreTheft

1Sem.

Reminds me of the Yield Max garbage

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Peter@Beeferking76

1Sem.

NAV erosion partly inherent and pre-programmed

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Fortunus@Quiny

But the overall return is pretty lousy. So far, only the $WINC is any good. So far, it has been able to keep up with the MSCI World in terms of returns and has a distribution of around 10% per year.

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Banana M.@Banana_Millionaire

@Quiny I also think it's the best so far, but how did you arrive at a 10% payout?

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Saschko@WarrenamBuffet

@Quiny $JEPQ is also running properly?

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Fortunus@Quiny

@WarrenamBuffet It performs better than the new ones, but worse than the $WINC. The performance in bad market phases will be interesting, but only the future will tell 😉

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Yieldrology@Yield-Ahead

$WINC I also find it interesting. IShares pursues a different strategy than JPM, dividend rotation model, quant models, futures... I am watching the ETF. But the fund volume is too small for me. Only USD 50 million. I always ask myself, if hardly any institutional money flows into it, does it make sense for me to invest there?

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Fortunus@Quiny

@Banana_Millionaire The distribution has so far been 10-13 cents per quarter. With a share price of approx. 5 euros, this results in a dividend yield of between 9 and 10%. Somewhere between 9 and 10% dividend yield.

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Saschko@WarrenamBuffet

@Quiny that's right

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Saschko@WarrenamBuffet

@Yield-Ahead yes, although the etf hasn't even been on the market for a year yet. If it doesn't have much more in it in 1-2 years, that would be strange.

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Yieldrology@Yield-Ahead

@WarrenamBuffet right. that's why i'm keeping an eye on him. you're invested? $WINC

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Saschko@WarrenamBuffet

@Yield-Ahead Yep, I have this one and the $JEPQ

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Yieldrology@Yield-Ahead

@WarrenamBuffet Which one will you give more weight to? Do you have a preference for one of the two?

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