Harness Money

$QQQY = Defiance Nasdaq 100 Enhanced Options Income ETF

$JEPI = Defiance S&P 500 Enhanced Options Income ETF

Both of these new funds pay out around $1 per month which is about a 60% payout ratio. Compared to other funds this is a huge payout.

These fun funds operate by writing daily option contracts and then returning the premium to the fund owners. This has been previously done with $JEPI but on a monthly basis with a solid payout.

What I have found is that the value of these funds tends to decrease over time. But the payout of the fund over time vastly exceeds the share decline or other investments. An investor would choose this type of investment purely for the regular income.

It is important to know that any income received from this investment is taxed as ordinary earned income rather than qualified dividend income. Which means the tax rate is going to be higher once a persons gets into the higher tax brackets.

There is definitely risk with this investment.

The success of this fund will be determined by the option writing strategy which is directed by the Defiance operator. Keep in mind this is also a fund that trades on the stock exchange which means that individual traders will drive the demand and price. The fund is based on underlying assets, but the price will fluctuate based on the daily trades.

These investments have not been around for very long. Same with the YieldMax investments like $TSLY. They have not been time tested to see if the are going to last decades. But the monthly payouts have been consistent. They do fluctuate over time, but they have always be paid out.

The real key to this strategy is like any stock/dividend strategy. The reinvestment. If a person can take their monthly payout and reinvest into these investments very quickly a person could build up a strong monthly stream of revenue. You could also use the proceeds from these investments to investment in other less risky assets like Berkshire Hathaway or Apple stock.

I am definitely trying it out in my income portfolio. Every asset I own in this portfolio pays income some quarterly so monthly. These assets includes stocks, bonds and ETFs.