Markets continue to shift in ways that force investors to balance income, risk, and long-term equity exposure more carefully than ever. AI-driven valuation concerns, shifting Fed expectations, and pockets of volatility have created an environment where responsive strategies stand out.
In a new episode of Lead-Lag Live, Melanie Schaffer welcomed back Si Katara, founder and CEO of TappAlpha, for a deep dive into why daily option overlays are gaining traction — and what’s next for one of the fastest-growing approaches in the income ETF landscape.
Daily Precision in a Market That Won’t Sit Still
Most covered-call strategies rely on 30-day options, creating a single position stretched across a full month of uncertainty. Earnings surprises, Federal Reserve commentary, and economic data all have the potential to disrupt the static path of a monthly contract.
Katara uses a simple analogy: You can point a plane from New York to Los Angeles, but weather can blow you off course. With a monthly overlay, adjustments are limited.
Daily options completely change the dynamic.
TappAlpha’s daily overlay engine gives managers:
multiple adjustment points each month
flexibility to step aside during big up-days
tighter tracking to SPY or QQQ
the ability to respond immediately to volatility spikes
This precision — rather than a set-and-wait structure — is a major reason TSPY and TDAQ have been attracting advisor interest.
Income Is Evolving as Rates Shift
With the Federal Reserve leaning toward data dependence and eventual easing, rate-driven income strategies face new uncertainty. Options-based income, however, is tied to volatility — a fundamentally different driver.
Volatility-driven income can remain compelling even if interest-rate–based income declines. Katara sees this as an ideal setup for daily overlay strategies:
volatility remains adequate to harvest
bonds may offer less yield going forward
investors still want long-term equity participation
TSPY and TDAQ hold real shares of SPY and QQQ, allowing investors to maintain long-term exposure while adding an income layer on top. For advisors seeking income without abandoning equities, this is a meaningful advantage.
A Crowded Covered-Call Market — With Misleading Labels
The covered-call ETF space continues to expand, but Katara argues that much of the marketing in the category remains confusing. Two issues stand out:
1. Distributions are not the same as yield
Many funds advertise high “yields” that actually represent distribution rates — often including return of capital. That can mislead investors about actual performance.
2. Many strategies sit at the extremes
Some funds maximize income at the expense of long-term growth. Others focus exclusively on growth with limited income benefits.
TappAlpha aims to fill the middle ground with balanced, buy-and-hold strategies that blend income with meaningful equity participation. Katara built the approach because he couldn’t find anything that matched his own needs as a long-term investor with income requirements.
What’s Next: Light Leverage, Weekly Payouts, and More Underlyings
With TSPY established and TDAQ showing early outperformance relative to the Nasdaq-100, TappAlpha is preparing its next wave of innovations:
Light leverage structures (around 25–30%)
Weekly distribution ETFs aimed at retail demand
Expansion of the daily overlay engine into additional underlying indexes
These efforts reflect the firm’s broader goal: scaling daily overlays into a family of growth-plus-income solutions.
Education Is Still the Priority
Katara stresses that terms like “yield,” “distribution,” and “return of capital” are widely misunderstood. Much of TappAlpha’s educational work focuses on helping advisors and investors:
understand true sources of ETF income
compare overlay structures apples-to-apples
see where distribution numbers can be misleading
understand the differences between daily and monthly overlays
“People save for decades,” Katara says. “They deserve clarity about what they’re investing in.”
Where to Learn More
More information, including product details and educational materials, is available at tappalphafunds.com.
The team also engages actively on X and LinkedIn.
Lead-Lag Live is part of The Lead-Lag Report, where we spotlight conversations that cut through the noise — separating market fantasy from fundamental truth.
DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of TappAlpha and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.
