Zero DTE option play based ETF

T

traderjo

Lot of you tubers promoting QDTE,XDTE Etfs for their high dividend yields
but hardly they talk about NAV erosion

Also something about "Return of Capital" tax treatment as compared to dividend income!
What I don't understand is
1) If the total div yield is not more that the NAV erosion then what is the point?
2) If the ETF is returning part of your own capital then what is the point!
3) what can happen if market crashes ( for thoe ETF who do 0DTE Call selling)
4) what can happen if market rises rapidly ( for those ETF who do 0DTE Cash covered PUT selling)

Can somebody please give a unbiased opinion
 
traderjo said:
Lot of you tubers promoting QDTE,XDTE Etfs for their high dividend yields
but hardly they talk about NAV erosion

Also something about "Return of Capital" tax treatment as compared to dividend income!
What I don't understand is
1) If the total div yield is not more that the NAV erosion then what is the point?
2) If the ETF is returning part of your own capital then what is the point!
3) what can happen if market crashes ( for thoe ETF who do 0DTE Call selling)
4) what can happen if market rises rapidly ( for those ETF who do 0DTE Cash covered PUT selling)

Can somebody please give a unbiased opinion
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that’s the scam in these products. They pitch “income” and to maintain that income they will erode NAV and blame that erosion on something else.
 
Found this video showing the risk,,, but people will fall for it
upload_2024-9-10_19-16-57.png
 
Thank you for sharing, but I am not sure if many people buy these ETFs.
I didn't even know they existed until you pointed them out.

It is more likely that people do their own covered calls when they want to.
 
The question is, is the volatility risk premium consistent, can superior risk-adjusted returns be had with selling volatility / options selling / options overwriting? The folks at QVR (google their articles) point out that the VRP has disappeared, turned negative since about 2013 due to the influx of mutual fund and ETF money. For 0DTE I see mixed results depending on the exact strategy, if I dig deeper; but even if some 0DTE strategies have positive returns, how long will it last as institutional money is pouring into these strategies?
P.S.: The terms "income", and what portion is ROC, is irrelevant; don't even bother reverse-engineering this terminology. Only total return and associated risk counts for the rational investor.
 
tradegoodstocks said:
The question is, is the volatility risk premium consistent, can superior risk-adjusted returns be had with selling volatility / options selling / options overwriting? The folks at QVR (google their articles) point out that the VRP has disappeared, turned negative since about 2013 due to the influx of mutual fund and ETF money. For 0DTE I see mixed results depending on the exact strategy, if I dig deeper; but even if some 0DTE strategies have positive returns, how long will it last as institutional money is pouring into these strategies?
P.S.: The terms "income", and what portion is ROC, is irrelevant; don't even bother reverse-engineering this terminology. Only total return and associated risk counts for the rational investor.
More...

no.
Probably not.
The term matters because it changes your perception of risk and your internal accounting. I’ve seen lots of newbies blow up because of this.
 
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