What Investors Want From Options Income ETPs

We asked investors how they think about options income ETPs (exchange-traded products) in our second IncomeShares investor survey. Most would take a bit less income if an ETP could capture more of a rise in its underlying asset. This article breaks down the results in twelve charts.

The survey ran from 15 to 25 October, and 133 investors answered anonymously. Of those, 39% invest from the UK and 30% from Italy, and 90% already hold at least one IncomeShares ETP.

What investors look for in options income ETPs 

Total return came first. Total return counts an ETP's price change plus the income it pays, and 53% of investors check it first. It was also the top answer in our first survey in July. The ETP's underlying asset came second, while only 2% start with fees.

Investors want the ETP's value to grow too – not just its income. We asked how important it is that the ETP's net asset value (NAV) grows as well. 88% of respondents said it's very or quite important. Only 12% said it's not important if the income is high enough.

80% would take a bit less income for more of a rise in the ETP's underlying asset. Options income ETPs aim to earn income by selling options. But that can mean capturing less of a rise in their underlying asset. We asked whether investors would accept a bit less income in return for more of that rise.

78% want an ETP that moves roughly in line with its underlying asset. How closely an options income ETP does that depends on its strategy. For example, an ETP that sells more options may help cushion more of a fall in the asset. But it can also capture less of a rise in the asset.

How investors want their income 

The middle option on income and price swings was the clear favourite. Option premiums have tended to rise with how much an asset's price swings. 70% picked medium income and medium price swings (like stock indices) over US Treasuries or volatile single stocks.

On the Nasdaq 100, the lowest income range was the top pick. For the same index, higher income has tended to mean capturing less of the index's rise. So we asked which yearly income range would suit investors best on a Nasdaq 100 options income ETP. 39% picked the lowest of the four – around 12% to 15% a year.

69% prefer a set income range. Option buyers pay the ETP an upfront fee (a premium) – and premiums can change with market conditions. If an ETP pays out every premium it collects, its income can rise and fall widely from month to month. With a set range, any extra premium income stays in the ETP – which may help support its share price. Our Gold+ Yield, Silver+ Yield, and 20+ Year Treasury Options ETPs already work this way. Each aims to pay a monthly income distribution of around 1% of its NAV.

Monthly income beat weekly payments. Weekly payments would come more often, but each payment would be smaller. For investors who reinvest, that could mean more trades and more broker fees.

Investors split their ETP income in different ways. 61% use a mix of spending it, reinvesting it, and investing it elsewhere.

What investors want us to launch next 

A world index came first. We already have options income ETPs on the S&P 500, Nasdaq 100, and Euro Stoxx 50. Investors could pick up to three more indices, and 64% chose a world index. An emerging markets index came second at 47% (ahead of the FTSE 100).

Specific sectors topped the types of ETP investors want. 61% picked sectors like healthcare, energy, or banks, while 52% chose dividend-paying stocks. Property and bitcoin itself (rather than digital asset-linked company shares) came next at 45% and 44%, respectively.

Investors also suggested new ETPs in their own words. Sector and theme ideas were the most common, from defence and healthcare to energy and space. Stock indices came next, then single stocks like Eli Lilly and Palo Alto Networks. We read every answer, and the results will feed into our research on potential future launches.

Key highlights 

• Total return came first for investors choosing options income ETPs, and 88% want the ETP's NAV to grow too.

• 80% would take a bit less income to capture more of a rise in the underlying asset. And 69% prefer a set income range.

• A world index (64%) and specific sectors (61%) topped the list of new ETPs that investors want us to launch.