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In the previous year, Neos Investments' SPYI fund classified 95% of its distributions as return of capital, while its QQQI fund classified 99% as return of capital.
During periods of high market volatility and sell-offs, Neos Investments' dynamic strategy reduces the notional coverage ratio and sells calls further out-of-the-money to preserve more upside for market recovery.
Neos Investments' Bitcoin-based income fund targets a distribution yield between 25% and 30% per year.
Option-based income ETFs have grown from a niche tool to become a major part of the active ETF market.
The growth in option-based income ETFs is driven by investor dissatisfaction with the volatility and low yields of traditional fixed income investments.
Investor comfort with options-based strategies has increased, with many now viewing options as a financial tool rather than a "gambling device."
First-generation covered call products typically sold away 100% of the upside potential by writing at-the-money calls on the full notional value of the underlying equity exposure.
"Generation 2.0" covered call strategies improve upon earlier versions by selling calls on less than 100% of the notional value and writing them out-of-the-money to preserve some upside potential.
Neos Investments' high-income equity strategy begins by fully replicating the S&P 500 index, buying all constituent stocks in their appropriate weightings.
Neos Investments has expanded its income-focused strategies into alternative asset classes, including gold, Bitcoin, MLPs, and real estate.
To improve tax efficiency, Neos Investments utilizes Section 1256 contracts, which are index-based options that receive a favorable 60% long-term and 40% short-term capital gains tax treatment.
Neos Investments prioritizes tax-loss harvesting to classify year-end distributions as return of capital, which are tax-deferred for investors.