ODTE

ODTE is an actively managed covered call ETF that primarily seeks current income and secondarily capital appreciation. It combines exposure to the S&P 500®, Nasdaq-100® and Russell 2000® indexes with the sale of short-dated out-of-the-money call options. The strategy seeks weekly distributions while retaining a portion of the upside in those markets.

A covered call strategy combines stock market exposure with selling call options against that exposure. ODTE receives a payment, called an option premium, in exchange for giving up gains above the option’s strike price. The strategy converts some potential market appreciation into income. Premiums may help offset market declines, but they do not protect investors from losses.

0DTE stands for "zero days to expiration." ODTE generally sells out-of-the-money call options that expire at the end of the same day (0DTE) or the next business day (1DTE). Because the calls roll every trading day, the fund's upside exposure resets daily instead of being capped for weeks or months at a time.

ODTE seeks to pay distributions weekly. Distributions are not guaranteed, and the amount can change from week to week. ODTE seeks favorable tax treatment on distributions versus ordinary income. The index options it uses may qualify as Section 1256 contracts, whose gains and losses are treated as 60% long-term and 40% short-term. A portion of distributions will likely be return of capital (ROC). ROC generally is not taxed when paid, but it lowers your cost basis in the shares.

ODTE seeks to pay distributions weekly. Distributions are not guaranteed, and the amount can change from week to week. Past distributions are listed on the Distributions tab of the ODTE fund page.

ODTE is designed for income-oriented investors who understand the covered call trade-off: giving up part of the equity upside for the potential to earn income. Some investors use it as an equity-income sleeve that stays tied to core U.S. equity benchmarks.

A traditional stock index ETF generally seeks to track its benchmark’s performance. ODTE combines equity exposure with a covered call strategy that seeks both growth and income. Selling calls generates premiums but limits participation in gains above the option strike prices. ODTE may therefore underperform a traditional index ETF during strong market rallies.

ODTE combines exposure to three major equity benchmarks with an actively managed, short-dated options strategy. Some covered call ETFs focus on a single index. ODTE can adjust its equity exposure and call-option allocations across the S&P 500®, Nasdaq-100® and Russell 2000®, with no fixed target weighting among them. Its investment process considers factors such as volatility, correlations and options liquidity. This gives investors exposure to a covered call strategy spanning multiple equity markets through one ETF.