The meteoric rise of covered-call exchange-traded funds (ETFs) — like the JPM Equity Premium Income ETF (JEPI), JPM Nasdaq Equity Premium Income ETF (JEPQ), and GX Nasdaq-100 Covered Call ETF (QYLD) — has been one of the most significant trends the past few years. Total assets in the option-income space now exceed $170 billion. While that is impressive, it is also downright dangerous.
Based on my multi-year immersion into analyzing the space, I suspect a lot of investors are walking around thinking they own something they don’t. And the signs of just how misunderstood these ETFs are is starting to show up. In the form of crashing stock prices on the underlying securities with them.
