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With WTPI, Enjoy Put-Selling Perks

BY | ETF Database
5:53 am ET 10/27/26 | 13 VIEWS
Advisors and income investors know that options-based funds are one of the fastest-growing segments in the ETF universe. They also know that the bulk of those funds are rooted in covered calls or call writing. It’s an effective, easy-to-understand strategy that largely delivers on the income promise.Of course, calls aren’t the only the options on the market, but few ETFs tap into the power of writing puts. The WisdomTree Equity Premium Income Fund (WTPI A-) is one of the pioneers in the put-selling ETF realm. This fund tracks the Volos US Large Cap Target 2.5% PutWrite Index. It has made a habit of outperforming some of the most revered covered-call ETFs on the market. Even with that stout performance advantage, WTPI delivers the goods when it comes to income. That underscores the point that it is a credible alternative to call-based options ETF. The $560.8 million ETF carries a distribution yield of nearly 12.1%. And like its call-based rivals, it delivers monthly income.Understanding WTPI Advantages & MechanicsPut-selling is a bullish-to-neutral options strategy. Market participants deploying it on individual equities generate income from sold options premium with the possibility of being assigned the underlying stock if it closes below the put’s strike price on expiration day. Smart traders sell puts on stocks they’d otherwise buy in an effort to gain the benefits of better pricing and income. WTPI eliminates the burden of constant put-selling that some investors may engage in as a way of commanding income. Likewise, because it’s an ETF, end users needn’t worry about being assigned a stock they’re not interested in owning. Then there’s the benefit of capital conservation. When selling cash-secured puts on an individual stock, the options seller must have enough cash in their brokerage account to cover ownership of the shares. With each contract representing 100 shares, that gets expensive, but it’s not a burden WTPI investors need to worry about.WTPI May Deliver Higher IncomeAnother advantage offered by WTPI is that puts are usually more expensive than calls. That’s because market participants are more fearful of losing capital, so they pay up for protection. Those higher prices — a volatility premium of sorts — imply WTPI can potentially deliver higher income than some covered-call counterparts. “Studies show that implied volatility (what options are priced at) is often higher than realized volatility (what actually happens),” according to Ultima. “This means sellers consistently earn a ‘volatility premium’, like collecting insurance payments from investors seeking protection.” For more news, information, and analysis, visit the Modern Alpha Content Hub.DisclosuresThis article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional. WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.

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