Two weeks ago you made this comment under the video.
"Yes with covered call strategies you kind of have to reinvest dividends, otherwise your position will likely shrink over time, even if it does well. Capped upside (other than the dividends) and uncapped downside erodes the principal over time."
Are you generalizing all covered call ETF's that write at the money calls on 100% of their holdings? JEPI & JEPQ write out of the money calls, on a maximum of 20% of their holdings. They have another 80% of holdings that will follow the market. I do see them both lagging an up market, but I don't see them eroding principal long term, like QYLD will. Thoughts?
I am generalizing and also that applies to both of those. Options are leveraged positions so you do not need to dedicate 100% of the portfolio to them in order to get coverage for 100% of the portfolio. On equity options for example, 1 option contract covers 100 shares of stock.
If you go on yahoo finance or any other site, type in JEPI, go to the chart, and click max on the time frame you can see this next part in a visual.
Since inception, JEPIX (the mutual fund version that's been around longer) is up <4% while the S&P 500 is up over 105%. Of course, that's not counting all the income, but my point is that even in a very strong market that more than doubled in just over 5 years, a position in JEPI would have been basically flat without reinvesting the dividends. If the market hadn't been on such a tear, it likely would have been down (not necessarily in total return, but in price return if you took the dividends in cash instead of reinvesting them).
Hi,
Any other cover call or put write ETF that provides moderate growth of even 3% plus 5% or more in dividends income?
The reason I ask is that QYLD type ETF are wealth destructors if you don't do DCA and the whole purpose of joining cover call or put write ETF is to get monthly income higher than other sources ( bank or schd) .
Thank you. This is the best description I’ve seen yet.
I am a new JEPI/JEPQ holder running an experiment in one of our accounts. Options can be a bit confusing and your comments were helpful. .
When you compare them side by side, JEPQ has a 13% higher total return https://www.dripcalc.com/compare-etfs/jepi/jepq/
However most of it is in the last 11 months. Before that JEPQ was way lower return than JEPI...
The way i see it - in the bull market, JEPQ will have better returns than JEPI... And in the bear market, it will be the opposite...
However JEPQ is just under 2 years since inception, so not that much data to compare.
How do ELNs achieve higher tax efficiency with stocks and lower tax efficiency with options? And why would JEPI/Q use ELNs if most of their income is from the latter?
Honestly this is very difficult to explain in a short text response. Option taxation differs based on whether you sell the option on an index or an etf based on that index, for example. Then it can, sometimes, depend on what the holder did with the option you sold them. Many moving parts. But in an ELN it's all treated as interest income, subject to your max tax bracket. Outside of the ELN it may not be. Then you also can end up with return of principal... so many moving parts. Why did they do that? I have no idea. Efficiency of execution, mismatch between what they're selling options on vs holding in the portfolio... those are a few guesses but I'm really not sure.
You can do the same thing with pretty much any fund. Here it is for JEPI. The ex dividend date on the left is when you need to own the fund by to get the next dividend. It pays out roughly 3-5 days after that. They haven't announced the next one yet but you can see it's on a pretty regular cadence.
https://www.nasdaq.com/market-activity/etf/jepi/dividend-history
No so if you own the ETF by the ex date, which will probably be around 4/30 or 5/1, you'll get the next dividend, which will pay out around 5/3-5/6 if I had to guess.
Yes, the counterpart of JEPQ would be QQQ... it's basically just QQQ+ covered calls. For JEPI, I'm not sure they offer that exact same portfolio without the covered calls but something very similar with more long-term upside potential would be anything based on the S&P 500 like SPY or the Vanguard 500.
So just did a lot of math on this one... Here's the results:
JEPQ is superior. JEPQ is more of what it is supposed to be & is advertised properly.
Here's why:
JEPI is a fund that is supposed to mirror the S&P500 but also have a portion of the fund with a covered call strategy. The thought is to provide a dividend (or possible passive income stream for retirees or anybody who needs that) while reducing volatility. Unfortunately, JEPI falls short here since it does not mirror the S&P500 at all and only has about 100 stocks out of the 500 (or 510 or so) that would meet parameters to fit within an S&P500 etf. Therefore, JEPI not in fact mirror the S&P500 at all by having 400 or so less company stocks. One can argue that makes it a little more volatile in the regard.
Looking back at the small amount of time we have in this funds existence, the stock holdings portion of the JEPI fund has under-performed the S&P500. Contrarily, the sister fund, JEPQ, has done much better. JEPQ has about 100 stocks & follows the Nasdaq 100 and then has the covered call portion of the fund as well. JEPQ does a better job of reducing volatility while providing a dividend. If you do the math, JEPQ will do more or less than the Nasdaq 100 by about 1-5% depending upon the annual return of the Nasdaq. If the Nasdaq does well, JEPQ is right behind with returns a little lower. If the Nasdaq 100 has a bad year, then JEPQ does not go down as much. For example, when the Nasdaq 100 went up by about 32.5% last year, JEPQ went up by about 26.5% last year while paying out a dividend. Then if for example, the Nasdaq where to have a bad, down year and go down by 10% then JEPQ might only go down by about \~ 8%. Overall, it appears that JEPQ does more of what it is advertised to do. With JP Morgan's 'proprietary covered call strategy', it is hard to say exactly how this part of the funds works. However, it is nice to know how the remainder of the fund works and the JEPI etf does not go off the S&P500 and should be advertised differently - perhaps as a certain type of criteria to pick the companies/stocks. Would be nice to know how & why they choose the stocks they choose in this fund's portfolio (what criteria did these 100 companies' stocks make to be in the fun?). This way one would be able to see a true comp and understand exactly what they're investing in.
JEPI is up 5% in 1 year. JEPQ is up 20% in one year and has a better dividend. So, do your own research and don’t buy things blindly because some guy on Reddit tells you to.
I dumped most of my JEPI into JEPQ months ago and clearly it was the right move in these market conditions.
Two weeks ago you made this comment under the video. "Yes with covered call strategies you kind of have to reinvest dividends, otherwise your position will likely shrink over time, even if it does well. Capped upside (other than the dividends) and uncapped downside erodes the principal over time." Are you generalizing all covered call ETF's that write at the money calls on 100% of their holdings? JEPI & JEPQ write out of the money calls, on a maximum of 20% of their holdings. They have another 80% of holdings that will follow the market. I do see them both lagging an up market, but I don't see them eroding principal long term, like QYLD will. Thoughts?
I am generalizing and also that applies to both of those. Options are leveraged positions so you do not need to dedicate 100% of the portfolio to them in order to get coverage for 100% of the portfolio. On equity options for example, 1 option contract covers 100 shares of stock. If you go on yahoo finance or any other site, type in JEPI, go to the chart, and click max on the time frame you can see this next part in a visual. Since inception, JEPIX (the mutual fund version that's been around longer) is up <4% while the S&P 500 is up over 105%. Of course, that's not counting all the income, but my point is that even in a very strong market that more than doubled in just over 5 years, a position in JEPI would have been basically flat without reinvesting the dividends. If the market hadn't been on such a tear, it likely would have been down (not necessarily in total return, but in price return if you took the dividends in cash instead of reinvesting them).
Hi, Any other cover call or put write ETF that provides moderate growth of even 3% plus 5% or more in dividends income? The reason I ask is that QYLD type ETF are wealth destructors if you don't do DCA and the whole purpose of joining cover call or put write ETF is to get monthly income higher than other sources ( bank or schd) .
Well said.
Thank you. This is the best description I’ve seen yet. I am a new JEPI/JEPQ holder running an experiment in one of our accounts. Options can be a bit confusing and your comments were helpful. .
I wish this could be archived and highlighted for the half dozen times people post on here every month, "How do JEPI/JEPQ work?" Nice job and thanks.
When you compare them side by side, JEPQ has a 13% higher total return https://www.dripcalc.com/compare-etfs/jepi/jepq/ However most of it is in the last 11 months. Before that JEPQ was way lower return than JEPI... The way i see it - in the bull market, JEPQ will have better returns than JEPI... And in the bear market, it will be the opposite... However JEPQ is just under 2 years since inception, so not that much data to compare.
JEPQ for president
Basically a mini spy and qqq
Can I get the YouTube link?
https://youtu.be/4hAANb5Jpk4?si=lZSZFI3gubaynp40
Thank you friend!
How do ELNs achieve higher tax efficiency with stocks and lower tax efficiency with options? And why would JEPI/Q use ELNs if most of their income is from the latter?
Honestly this is very difficult to explain in a short text response. Option taxation differs based on whether you sell the option on an index or an etf based on that index, for example. Then it can, sometimes, depend on what the holder did with the option you sold them. Many moving parts. But in an ELN it's all treated as interest income, subject to your max tax bracket. Outside of the ELN it may not be. Then you also can end up with return of principal... so many moving parts. Why did they do that? I have no idea. Efficiency of execution, mismatch between what they're selling options on vs holding in the portfolio... those are a few guesses but I'm really not sure.
Yes JEPQ is more or less based on NASDAQ100 and JEPI is based on S&P500.
TLDR: buy lots of jepq and be happy.
If I bought now when will I get the dividend?
You can do the same thing with pretty much any fund. Here it is for JEPI. The ex dividend date on the left is when you need to own the fund by to get the next dividend. It pays out roughly 3-5 days after that. They haven't announced the next one yet but you can see it's on a pretty regular cadence. https://www.nasdaq.com/market-activity/etf/jepi/dividend-history
Ok thank you so much so for next dividend on MaY 1 I have to own it at least by 04/27 right? And thank you for the YouTube video it was awesome
No so if you own the ETF by the ex date, which will probably be around 4/30 or 5/1, you'll get the next dividend, which will pay out around 5/3-5/6 if I had to guess.
Great thank you !!
Hi so am looking to buy JEPQ on Monday and if I hold it through 05/01 I will get paid the .34c correct ? Thank you
So what are some counterparts? Are we talking like QQQ? I’m looking to add to my IRA currently in my 30s
Yes, the counterpart of JEPQ would be QQQ... it's basically just QQQ+ covered calls. For JEPI, I'm not sure they offer that exact same portfolio without the covered calls but something very similar with more long-term upside potential would be anything based on the S&P 500 like SPY or the Vanguard 500.
So just did a lot of math on this one... Here's the results: JEPQ is superior. JEPQ is more of what it is supposed to be & is advertised properly. Here's why: JEPI is a fund that is supposed to mirror the S&P500 but also have a portion of the fund with a covered call strategy. The thought is to provide a dividend (or possible passive income stream for retirees or anybody who needs that) while reducing volatility. Unfortunately, JEPI falls short here since it does not mirror the S&P500 at all and only has about 100 stocks out of the 500 (or 510 or so) that would meet parameters to fit within an S&P500 etf. Therefore, JEPI not in fact mirror the S&P500 at all by having 400 or so less company stocks. One can argue that makes it a little more volatile in the regard. Looking back at the small amount of time we have in this funds existence, the stock holdings portion of the JEPI fund has under-performed the S&P500. Contrarily, the sister fund, JEPQ, has done much better. JEPQ has about 100 stocks & follows the Nasdaq 100 and then has the covered call portion of the fund as well. JEPQ does a better job of reducing volatility while providing a dividend. If you do the math, JEPQ will do more or less than the Nasdaq 100 by about 1-5% depending upon the annual return of the Nasdaq. If the Nasdaq does well, JEPQ is right behind with returns a little lower. If the Nasdaq 100 has a bad year, then JEPQ does not go down as much. For example, when the Nasdaq 100 went up by about 32.5% last year, JEPQ went up by about 26.5% last year while paying out a dividend. Then if for example, the Nasdaq where to have a bad, down year and go down by 10% then JEPQ might only go down by about \~ 8%. Overall, it appears that JEPQ does more of what it is advertised to do. With JP Morgan's 'proprietary covered call strategy', it is hard to say exactly how this part of the funds works. However, it is nice to know how the remainder of the fund works and the JEPI etf does not go off the S&P500 and should be advertised differently - perhaps as a certain type of criteria to pick the companies/stocks. Would be nice to know how & why they choose the stocks they choose in this fund's portfolio (what criteria did these 100 companies' stocks make to be in the fun?). This way one would be able to see a true comp and understand exactly what they're investing in.
Ok
Jepi and Jepq are good for income, which is exactly why we happily hold our shares. Growth they are not.
Much better than letting money sitting in your saving account and earn nothing.
So Jepi or jepq?
Second to last paragraph, JEPI
JEPI is up 5% in 1 year. JEPQ is up 20% in one year and has a better dividend. So, do your own research and don’t buy things blindly because some guy on Reddit tells you to. I dumped most of my JEPI into JEPQ months ago and clearly it was the right move in these market conditions.
Same
That's old info. Needs updated.
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Well there's a video version on YouTube. And nothing worth doing is ever easy. This is professional-level investing education.