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Dave Nadig reports shot fired by SPDR at JP Morgan.

SPIN is a new one to me and sort of new, it started in early 2024 and oddly for a SPDR ETF it only has $61 million in AUM. SPIN picks individual stocks and sells index calls as does JEPI.

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SPIN has had the upper hand since it launched but JEPI has had strong years along the way too. Anyone who believes JEPI is great is simply enduring a relatively weak period. At some point SPIN will do likewise. Even if SPIN is great or turns out to be generally better than JEPI it will have periods where it does poorly. Using funds that sell volatility as anything beyond a small diversifier at the margin is a tough way to make a living. 

But as a small diversifier, I am a believer that there are ways to sell volatility even if the most popular way, the single stock covered call ETFs is a very flawed way to do it. I've talked about client/personal holding PPFIX as a very low leverage way to sell volatility, the other day we looked at OCTH and OCTJ in the same context but they're a little more volatile (Innovator has other funds running the same strategy with different reset months).

Mathew Tuttle hosted a webinar on Friday titled Covered Call ETFs Suck. YieldMAX took a beating in the webinar.

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The chart compares the price only return of the Tesla YieldMAX TSLY and the Netflix YieldMAX NFLY. It shows a point we've touched on here but that Tuttle seemed to really hit on which is that selling calls on very volatile stocks in the manner that the ETFs do isn't a great trade. The more volatile, the worse it will probably be as seen in the Tesla/Netflix comparison. 

Tuttle's firm is working on some interesting things. They have a "no bleed" tail risk fund coming that I may have mentioned before and they are working on a fund that would be 100% S&P 500 and 100% their tail risk strategy. The other idea is ETFs that sell put spreads on individual stocks. Selling put spreads is bullish and of course would be a derivative income strategy. Again, as a small diversifier at the margin, this might be interesting. 

We spend a lot of time studying volatility as an asset class and a strategy because I think it is an important diversifier but there are probably more ways to use it incorrectly than correctly. 

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