One Covered Call ETF That Seeks to Offer Income, Equity Exposure, and Reduced Volatility

One Covered Call ETF That Seeks to Offer Income, Equity Exposure, and Potentially Lower Volatility

Investors now have a way to bolster their portfolio with high yields, potential long-term growth, and managed volatility all in one ETF effective enough to serve as a core equity holding.

The TappAlpha SPY Growth & Daily Income ETF (TSPY) is a pioneering covered call strategy that gives investors the opportunity to benefit from:

• Growth and inflation protection through exposure to the S&P 500
• High monthly income—distributions have historically been 13-14% annualized
• Potentially lower volatility due to the ability to generate daily options premiums     

The ETF seeks to accomplish this balance with a tech-enabled options strategy on the S&P 500 that provides monthly income with full market exposure through dollar-for-dollar ownership of SPY. In doing so, TSPY aims to advance the covered call ETF space, which has already garnered tens of billions in allocations. Through a daily covered call strategy, TSPY is designed to generate income from option premiums. By selling “out-of-the-money” options on a daily basis, TSPY aims to capture premium income while adjusting to market conditions. Investors now have the chance to broaden their plans beyond conventional stocks and bonds.

How it Works

While covered call ETFs are not new, TSPY enables a more effective, pioneering covered call strategy by writing zero days to expiration options (0DTE), which expire on the same day. As a result, TSPY can harvest option premiums and issue them as monthly distributions. In the past, this has delivered 4-4.5x the premiums of traditional covered call strategies at the same risk level. This approach differs from other covered call ETFs claiming to be 0DTE, which hold positions overnight (1DTE). By writing true 0DTE call options, TSPY seeks to avoid the volatility and uncertainty that can emerge after the market closes, when earnings and economic data are typically announced.

The technology behind TSPY seeks to enable the fast data processing required to execute the 0DTE strategy, making TSPY a more efficient covered call ETF. With same-day calls, the fund can adjust the strike price daily to match the market's movements and account for known market events like rate announcements. This flexibility allows the ETF to remain within its intended risk parameters. Unlike traditional 30-day options strategies used for income and volatility reduction, TSPY’s daily strategy allows it to serve as a core equity holding by delivering market-like returns. In addition, it has delivered 14% annualized income distributed tax-efficiently, some downside protection, and a lower beta of 0.83.

Capitalizing on a Changing Market

This approach to investing takes advantage of the dramatic surge of 0DTE activity among retail investors. The rise of commission-free trading platforms and frictionless user interfaces has democratized access to options, making it easier than ever for investors to use these instruments. Today, daily transaction volume in 0DTEs is over 50 percent of the total daily option volume, representing a more than 100 percent rise over 2021 levels. TSPY gives investors the opportunity to benefit from the rise of capital flowing into these 0DTE options with the tax-efficient ETF wrapper.

Other emerging changes in the market require retail investors to take a more strategic approach. For example:

• TSPY offers investors a compelling way to generate income within equity markets, offering an alternative to traditional fixed income. It also remains relevant when the Federal Reserve eventually cuts rates, helping to offset potential declines in traditional fixed-income yields while maintaining exposure to equity growth.
• As uncertainty surrounding tariffs, European conflicts, and U.S. domestic policies continue to drive market fluctuations, investors should position themselves to potentially thrive in up, down, or sideways markets.
• With a beta of about 0.8 compared to the S&P 500 index, TSPY offers the possibility of reduced volatility as investors face changes in the Fed's policy, the emergence of AI, and concerns over trade policy.
• The ETF allows investors to benefit from a sophisticated strategy without having to manage the complexity and tax impacts of trading options everyday.

Consider TSPY if you want the potential benefits of high income generation and capital appreciation with less volatility.

Disclosures

Distributions from TSPY include the following estimated return of capital: 100%.

There is no guarantee that the Fund will pay or continue to pay distributions in the future and distributions, if any, may be less than the current distribution.

Standardized performance current to the most recent month-end and quarter-end can be obtained by visiting TappAlphaFunds.com. The 30 Day SEC Yield is 0.68% (as of 4/30/25).

Beta is a statistic that measures the expected increase or decrease of an individual stock price in proportion to movements of the stock market as a whole.

The principal risks affecting shareholders’ investments in the Fund including the risks of the investment strategies of the Index are set forth below. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any government agency. The Fund’s Shares will change in value, and you could lose money by investing in the Fund. The Fund may not achieve its investment objectives.

ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a premium or discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a Fund’s ability to sell its shares. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Investing involves risk. Principal loss is possible. The Fund’s shares will change in value, and you could lose money by investing in the Fund. The Fund may not achieve its investment objectives. The Fund invests in options contracts that are based on the value of the Index, including SPX and XSP options. This subjects the Fund to certain of the same risks as if it owned shares of companies that comprised the Index, even though it does not own shares of companies in the Index. The Fund will have exposure to declines in the Index. The Fund is subject to potential losses if the Index loses value, which may not be offset by income received by the Fund. By virtue of the Fund’s investments in options contracts that are based on the value of the Index, the Fund may also be subject to an indirect investment risk, an index trading risk & an S&P 500 Index Risk.

To the extent that the Fund invests in other ETFs or investment companies, the value of an investment in the Fund is based on the performance of the underlying funds in which the Fund invests and the allocation of its assets among those ETFs or investment companies. The Fund may incur high portfolio turnover to manage the Fund’s investment exposure. The Fund is classified as “non-diversified” under the 1940 Act. As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one issuer by the diversification requirements imposed by the Internal Revenue Code of 1986, as amended (the “Code”). A decline in the value of an investment in a single issuer could cause a Fund’s overall value to decline to a greater degree than if the Fund held a more diversified portfolio. For more information about the risks of investing in this Fund, please see the prospectus.

The SPDR® S&P 500® ETF Trust. The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index (the “Index”).

The S&P 500® Index. The S&P 500® Index is a widely recognized benchmark index that tracks the performance of 500 of the largest U.S.- based companies listed on the New York Stock Exchange or Nasdaq. These companies represent approximately 80% of the total U.S. equities market by capitalization, making it a large-cap index. The S&P 500® Index includes 500 selected companies, all of which are listed on national stock exchanges and spans a broad range of major sectors. The five largest sectors in the Index as of December 29, 2023 were information technology, financials, healthcare, consumer discretionary and industrials. This distribution can vary over time as the market value of these sectors change. Regarding volatility, the S&P 500® Index, like all market indices, has experienced periods of significant daily price movements. However, the specific degree of volatility can vary and is subject to change based on overall market conditions. Despite these periods of volatility, the Index has shown long-term growth over its history.

Due to the short time until their expiration, 0DTE options are more sensitive to sudden price movements and market volatility than options with more time until expiration. Because of this, the timing of trades utilizing 0DTE options becomes more critical. Even a slight delay in the execution of 0DTE trades can significantly impact the outcome of the trade. 0DTE options may also suffer from low liquidity, making it more difficult for the Fund to enter into its positions each morning at desired prices. The bid-ask spreads on 0DTE options can be wider than with traditional options, increasing the Fund's transaction costs and negatively affecting its returns. These risks may negatively impact the performance of the fund.

As of the date of this prospectus, the Fund has no operating history and currently has fewer assets than larger funds. Like other new funds, large inflows and outflows may impact the Fund’s market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected. The Fund may incur high portfolio turnover to manage the Fund’s investment exposure. Additionally, active market trading of the Fund’s Shares may cause more frequent creation or redemption activities that could, in certain circumstances, increase the number of portfolio transactions. High levels of portfolio transactions increase brokerage and other transaction costs and may result in increased taxable capital gains. Each of these factors could have a negative impact on the performance of the Fund.

You could lose money by investing in the Fund and the Fund may not achieve its investment objectives.

Past performance does not guarantee future results.

Prospectus can be downloaded here: https://cdn.prod.website-files.com/659c04f60051914529d01524/681a6b8bc29d7c98ee45dce8_TappAlpha%20Prospectus%20v1%204.30.2025%20final.pdf

Investing in securities involves risk, including the potential loss of principal.

Distributor: Foreside Fund Services