ISPY ETF

ProShares S&P 500 High Income ETF aims to provide both income and capital growth by following the S&P 500 Daily Covered Call Index. It offers a 9% dividend yield with monthly payments, making it attractive for investors looking for income and exposure to S&P 500 stocks. However, its dependence on return of capital for these payments raises questions about the sustainability of the dividends, so investors should be careful until a full annual report is released.

ISPY uses a covered call strategy on the S&P 500, earning money from option premiums while limiting gains in a rising market. Unlike many other covered call funds that write monthly at-the-money calls, ISPY writes out-of-the-money calls on a daily basis. As a result, the fund has been doing better than other similar covered call ETFs.

ISPY's daily call options strategy offers superior upside potential compared to monthly options. Compared to other S&P 500 covered call funds, ISPY has one of the best balances of capital appreciation and yields with tax-efficient distributions and reasonable management expenses. Despite minimal downside protection and third-party risk, ISPY's predictable performance and sustainable distributions make it potentially the best S&P 500 covered call fund on the market.

ISPY's daily call option strategy has outperformed traditional monthly covered call ETFs, showing an 11.24% gain and a 19.81% ROI in 2024. ISPY invests 80% in S&P 500 companies and uses daily call options, generating high income and closely mimicking market returns. Despite market risks, ISPY's strategy offers high-single digit yields, making it an attractive option for income-focused investors.

The ProShares S&P 500 High Income ETF sells daily covered calls on the S&P 500 Index to generate high distribution yields for investors. ISPY has outperformed the more well-known JEPI ETF since its inception, as its use of daily call options effectively resets its performance cap daily, allowing ISPY to capture more upside. However, by the same token, the ISPY ETF should underperform in down markets, as it receives less option premium to cushion drawdowns.

ProShares S&P 500 High Income ETF (ISPY) offers enhanced income compared to SPDR S&P 500 ETF (SPY). That ETF is reviewed in detail. JPMorgan Equity Premium Income ETF (JEPI) would be considered a competitor and is well known. I also review this ETF. ISPY started in late 2023 and has outperformed JEPI so far in 2024. While a few months doesn't mean long-term outperformance, I still give the ISPY ETF a Buy rating.