Tappalpha SPY G and D Index ETF (TSPY)
NASDAQ (NMS) NASDAQ (NMS) Primary Summary
TSPY Chart
TSPY: 13% Yield That Could Fund Your Retirement, It's A Buy
TSPY offers ~13% yield, which might not sound too promising in terms of the ETF being included in durable retirement income portfolio. Typically, anything that exceed, say, 8% to 10% yield range carries elevated risks on both dividend and value sustainability front. However, I have still included TSPY in my 'high yield/medium risk' portfolio bucket - a portfolio designed for durable retirement income extraction and gradual snowballing.
TSPY Vs. ISPY: Advantages Of Active Management In Options Trading
Selling 0 days-to-expiry (0DTE) covered calls offers high income and upside potential with less downside protection compared to monthly covered call funds. TSPY's active management approach generated consistent distributions yielding 14% while outperforming both ISPY and the S&P 500 in total returns. ISPY's passive, formulaic strategy provides predictable returns but suffers from volatile distributions, making TSPY a potential superior alternative if performance continues.
Tappalpha SPY G and D Index ETF (TSPY) FAQ
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Tappalpha SPY G and D Index ETF Profile
| NASDAQ (NMS) Exchange | US Country |
Overview
TSPY represents the first exchange-traded fund (ETF) launched by its issuer, aiming to democratize access to advanced investment strategies traditionally reserved for sophisticated investors. The fund's strategy revolves around owning shares of the SPDR S&P 500 Index trust (SPY) and engaging in daily call options writing to generate income. This innovative approach targets investors seeking to capitalize on the potential for regular income distribution, despite the inherent risks associated with a high turnover rate and the taxation of distributions as ordinary income. By focusing on immediate to short-term expiration periods for the options it writes, TSPY offers a distinctive proposition in the investment landscape.
Products and Services
- SPDR S&P 500 Index Trust Shares (SPY)
TSPY holds shares of the SPDR S&P 500 Index Trust, which tracks the performance of the S&P 500 Index, aiming to mirror its price and yield performance. This foundational asset provides the basis for TSPY's options writing strategy.
- Call Options Writing
As a core part of its income-generating strategy, TSPY engages in the daily writing of call options. These options may be written on the SPY shares, the S&P 500 Index (SPX), or the Cboe Mini-SPX Index (XSP), employing mostly 0DTE (Zero Days to Expiry) contracts but potentially extending up to one week. This approach is designed to capitalize on short-term volatility and price movements to generate income.
- Monthly Income Distribution
The income generated through TSPY's call options strategy is targeted for monthly distribution to investors. This feature is particularly appealing to those seeking regular income streams from their investments, although it's important to note that these distributions will be considered ordinary income for tax purposes.
- US Treasury Securities as Collateral
To back its options writing strategy and manage risk, TSPY holds US Treasury securities as collateral. This practice provides a layer of security for the fund's obligations under the options contracts, aligning with prudent risk management principles.
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