Pitfalls in Option Income Strategy ETF Returns

about 1 month ago

Rob Carver

"The ETF gains 42% a year, but investors still lose money... because if most investors time their entries and exits poorly, their aggregated cash return can actually turn negative, even as the headline percentage return is high."

The discussion explains an apparent paradox in an option income strategy ETF, where the fund reports impressive headline returns (42% annually) but delivers negative cash returns to investors. This occurs because investor timing—buying in during drawdowns and selling before upswings—results in cash returns that can be significantly lower than the fund's overall performance. The insight serves as a cautionary note against relying solely on headline return figures.

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