looking for opinions on the monthly paying ETF's like JEPI,JEPQ,SPYI, etc.. what percentage of allocation do you think is safe in these?... some of these yields look pretty enticing, and I'm thinking it's almost time to start pulling income off my investments

You need a financial advisor. We don't know how old you are, how much money you have saved in the bank, how much is in your 401k, how much social security you are entitled to, how in debt you are, what influx of cash might be on the horizon, what age you want to retire, your family medical history or how long you think you might live, etc etc etc. All things to be considered when trying to figure out how much money to put into something and if that amount is "safe" or not. Good luck to you. I wish you the best.

If you have 100 shares of a company you can sell covered calls and generate income(I do not sell CC’s)

Myself, I’ve used JEPI in the past,,,it was fine

Currently using yeildmax etfs to generate monthly income. Yeildmax is relatively new

For example 39500$ CONY paid 4720.20$ last month(March),,,huge!!

CONY and MSTY are the current fattest divy’s,,,,, they change

Payday is soon,May 8,,,I’ll update on this months payment


As per allocation/what’s safe???? That’s up too you,,,,very little would be my suggestion

Not financial advice!!

As far as AA it is what risk level you are comfortable with. I like 80/20%. As far as what you want to take off the table I personally never go more than 50%.

I'll try and narrow this down... some of these seem real risky.. some not so much, so if you take one like JEPQ, and it yields around 9% paying monthly, is it sustainable?1000 shares would supply around $400 a month income

Jamie dimon thinks so,,,

JEPQ is tied to the Nasdaq 100 Index

If tech stocks keep ripping,?,?,?,,,it’s sustainable

Nothing is guaranteed

If it was guaranteed, everyone would just pile in

I have to generally agree with surveyor.

Your question of "is this sustainable"........I assume you are asking if the yield at 9% is sustainable.

I would say that generally it is. We are in a fairly low volatility environment right now so if volatility increases that should also increase option premiums. Since that is how these funds generate income, then they should be able to maintain a similar yield.

As far as how much to allocate to them I would look at it this way.
If you are comfortable owning SPY or QQQ then you should be even more comfortable owning JEPI or JEPQ or SPYI. SO whatever allocations you may have now are probably still appropriate........for you.

The drawbacks on these ETF's are 1. the investment will underperform in bull markets...because of capital appreciation being 'capped' by the short calls written against the stocks. 2. All of these types of funds have what I believe are "expensive" management fees compared to just owning dividend paying stocks outright or the straight SPY, QQQ themselves.The greater expense is due to the transaction costs the funds incur trading the options that generate the income.

The upside is that you will outperform the market during bear market events. IOW, you will lose less than the index in a down market. Another benefit is that these ETF's are far less volatile than the market overall. The historical vol on JEPI is around 9 whereas vol on SPY is close to 14 and QQQ is close to 18.

Might not be a bad choice in this environment

Just observations. Not recommendations.

I agree.

Dividend stocks should do well in a falling rate environment

Let’s turn this into a learning experience with w17’s help,,,,at least for me. Lol


So say the OP is looking for monthly income, as he posted,,,,,


He currently owns the q’s/spy( what ever) in his portfolio

Wouldn’t it just be better to sell covered calls(1 month out)??

It’s my understanding that JEPI/JEPQ are meant for folks that don’t meet “options” criteria(not enough shares)??I could/probably be very wrong??

Sorry for the derail

Yes you could do that if....as you point out, you own sufficient shares to sell a call.

I also assumed that the OP was talking about a taxable account, rather than inside an IRA or other tax advantaged account.

In order to do what you suggest you may have to request option trading permissions from your broker......but that should be a simple thing since you are only asking for level one permissions. Certain brokers may also want you to be in a margin account rather than a cash account. That is no big deal either as you will not be using margin in a covered call trade. It just makes accounting simpler for the broker.

Where you may not be better of is in transaction costs.


I suspect that the portfolio managers running JEPI get charged a lot less for selling 500 call contracts on their holdings than an individual would be charged. Just for comparison..lets say the JEPI guys get charged 4 cents for every contract they sell............but an individual might pay 60 cents to sell one or two of the same contracts. Volume matters.

But you are right that there is nothing stopping an individual from setting up his own portfolio in the same way.

Think about your tax situation too though.

All those option premiums that you take in are characterized as short term capital gains and taxed at a higher rate than if you held stock for a year and then sold it at a gain. In the latter example you would pay long term cap/gains rate which can be zero depending on your overall tax bracket. But you would not have monthly income in that example.

Thanks W17

So humour me if you don’t mind,,,,,


Screenshot from RBC



So say the strike at 450$,,,,,that’s 5.48$ times 100

Just trying to figure this out

If you don’t mind,,,, explain the different ways this “make believe” trade plays out

Thank you

This here is very solid advice as usual.

That is correct. The market maker is offering to sell you that contract (ASK) at $548 and he is willing to buy the same contract (BID) at $544.

So lets say you buy one contract at $546 ( try to split the "spread" at least. ) . You are betting that on June 7 (expiration of that contract) the QQQ will be AT LEAST $450 +$546 dollars for you to just break even. So QQQ would need to be 455.46 at expiration.

Lets say QQQ closes at 452.00 at expiration. Your contract will have 200 dollars of value at that point. You will still experience a loss because you paid 546 when you bought it


So for you to make a profit, QQQ must close higher than 455.46 at expiration. Any other closing value below 455.46 will result in a loss to you.


I am a confirmed SELLER of options. Never a buyer unless it is to hedge a position......but that's just me.

Excellent,,excellent

Thank you

Just learning!!

Okay so in the above scenario I was the buyer,,,

So how does the selling scenario happen??

You'll want to get a thorough understanding of the "Greeks"......mathematical derivatives of the option price.......delta, gamma, theta, vega, rho. The two most important are delta and theta.

When you buy an option you are buying "time' which is represented by theta. Delta tells you how much the option price will change for a one dollar change in the underlying...QQQ in this instance.


So when you buy an option..........it loses value every day because of the passage of time. When you sell an option that time decay is working in your favor........you have essentially sold 'time'.

In the case of the 450 ca;ll in your example above........the delta of that contract is currently .362.........which means that if QQQ goes up one dollar, the option value will go up 36.2 cents...................that's a good thing.....except that time (theta) is running against you.

Rule of thumb: you can use the delta of any option to get a ROUGH idea of the PROBABILITY of that contract having value at expiration. So in the 450 call there is only a 36.2% probability that you will make a profit on that trade.

CBOE has a pretty good tutorial on options. It's a good place to start. This can be a n extremely confusing topic and is certainly not for everyone. But it is a great tool to have available.

I don't like CC because they limit your upside. I much prefer to sell puts. But that scares a lot of folks. I understand that.

I’ve never done any of it,,,,but some day

Study more,,,

Thank you for taking the time to reply w17

Glad to do it. It is a subject I thoroughly enjoy

If you own 100 shares of QQQ you could enter an order to sell one june7, 450 call at....5.47........That knocks out the specialist because you are now offering to sell cheaper than he is. So YOUR offer is displayed nationally instead of his. ))) ( lots of mind games to play with the market maker)

Someone buys your contract. You receive 547$ minus transaction costs.

Expiration rolls around and if QQQ closes below 450 the contract expires worthless and you keep the money received up front.

If QQQ closes at 452 that contract now has 200 dollars intrinsic value...You can either buy the contact back at a bit over 200 to close your position. You will still make a profit of somewhere around 340 because you took in 547 up front. OR.......you can let it run through expiration and lose your shares of QQQ but get paid 450 per share for them....the strike price of the contract. You will still keep the initial premium of 547$
You will make a profit on the trade as long as QQQ closes below 455.47 at expiration...... if it closes above that point you will incur a loss.

Lets say QQQ closes at 456 at expiration. You will have a loss of .53 x 100 or 53 dollars plus transaction fees.