Bet_Noire The markets have been on a roll recently, making multiple new highs every week. There is a joke going around saying that "markets make 5 new all-time highs in a good week, but only 2-3 new all-time highs in a bad week". The S&P 500 is now up 56% and the Nasdaq is up 86% in less than 2 years since the bottom of October 2022.
Markets seem to keep rallying higher and higher without making any pullbacks, experiencing corrections or profit-taking seems to be almost completely non-existent. Many investors are scratching their heads about what's going on and others are looking for alternative funds to participate in at least some of the market performance while reducing their risk, and one of these funds is Neos S&P 500 High Income ETF ( BATS: SPYI ). Data by YCharts Overview of the Fund's Strategy The fund holds shares of S&P 500 index and writes covered calls against its holdings.
What makes this fund different from many other covered call funds is that it tries to participate in at least some of the price appreciation by doing one of two things: 1) either write call options that are out of money or 2) writing call spreads instead of call options. Thus, the fund's performance in the last couple of years is better than some of its peers. Data by YCharts I originally covered this fund back in early 2023 in an article titled SPYI Is An Interesting Income Play.
Back then, the fund was purely doing covered call spreads, but since then, it shifted its strategy to include a mix.
