Next Evolution Options Strategies: Seeking Income as the Outcome

By: NEOS Investments

NEOS Investments was founded by a global team of experts who collectively bring decades of experience, both individually and as colleagues working together at several previous firms on numerous ETFs currently in market.

Our suite of options-based income ETFs combine quantitative analysis with decades of experience trading and investing across multiple markets, aiming to empower the investor with core portfolio building blocks that seek to provide monthly income, tax efficiency, and diversification through data-driven options-based ETFs.

To this point, though there has been a proliferation of options-based ETF strategies brought to market, the vast majority provide only a one-dimensional solution such as income generation or downside protection, and we believe investors want and deserve more.

Potential Benefits of our Next Evolution Options Strategies:

  • Seeks high monthly income
  • Aims to capitalize on tax efficient product structures and fund management
  • May function as an income enhancing complement to core portfolio allocations
  • Seeks to meet investor demands across both fixed income and equity allocations
  • Utilizes data-driven research that seeks to enhance investor outcomes

Aiming to Overcome Current Challenges to Income Generation

As the frequency of once-in-a-generation events seemingly increases, traditional income-oriented investments may no longer provide the income potential investors need. The capital you invest requires strategies that consider the challenges of our current market while aiming to evolve with our marketplace.

Our Next Evolution of Options Strategies are designed to help navigate the challenges of modern markets, providing income generation and tax-efficiency layered on top of the core portfolio exposures across equities, fixed income, and cash.

ETFs That Seek Income as the Outcome

When seeking income is the desired outcome, more investors have been turning to options trading to supplement their portfolio yield. The liquidity and growing accessibility of options markets provide more opportunities to supplement return and protect purchasing power, while the scope and complexity of options investments benefit from an experienced manager.

NEOS ETFs seek to offer higher income with greater tax efficiency:

Multi-dimensional products: NEOS options-based solutions are designed to generate monthly income AND provide compelling total returns in tax efficient offerings.

Active Management: A data-driven approach utilizing systematic, rules-based active management aims to enhance investor outcomes throughout different market cycles.

Core Portfolio Building Blocks: NEOS ETFs offer core portfolio exposure with data-driven options strategies seeking monthly income, packaged into accessible ETFs. The result is high monthly income potential for equities and enhanced monthly income potential for fixed income and cash alternatives.

Income Generating Overlays: Income is added through premium generated from writing (selling) covered calls on equity products or put spreads on fixed income and cash alternative products. This alternative approach to traditional income focused investments may help offset interest rate risk, inflationary pressures, and offer greater portfolio diversification.

Enhanced Income 1-3 Month T-Bill ETF (CSHI) & Enhanced Income Aggregate Bond ETF (BNDI):

  • Core fixed income and cash alternative ETFs that seek to provide enhanced monthly income (above investing in the same underlying exposure)
  • Enhanced income potential is generated from the sale of S&P 500 index put options subject to favorable 60/40 tax rates
  • Seeks to maintain a similar risk profile to the underlying index investment
  • Fund managers aim to take advantage of tax loss harvesting opportunities within the portfolio
  • May limit credit, duration, and inflation risks present in many fixed income investments

S&P 500 High Income ETF (SPYI):

  • Core equity ETF that seeks to provide a high monthly income stream
  • Majority of income potential is generated from the sale of SPX Index call options subject to favorable 60/40 tax rates
  • Fund managers aim to take advantage of tax loss harvesting opportunities within the portfolio
  • Opportunity for partial upside capture when the S&P 500 Index appreciates
  • May be less sensitive to credit, duration, and inflation risks present in many traditional income-oriented investments

Related Topics:

The Difference Between 30-Day SEC Yield, Distribution Yield, and Dividend Yield

Understanding the differences between 30-day SEC yield, distribution yield, and dividend yield can help investors better evaluate the performance of their income-focused investments. 30-day SEC yield doesn't include income received from selling options, which is why distribution yield provides a more comprehensive representation of the income generated by NEOS ETFs.

Understanding "Return of Capital"

Aiming to Maximize Returns and Minimize Taxes: The Potential Benefits of Return of Capital Distributions in Option-Writing ETFs