Portfolio Manager
As a kid, I wanted to be a doctor. But when I was in medical school, I saw blood three times, and fainted three times. Then, I switched and went to business school - took my first class on options and I was hooked.
I've spent almost 40 years trading options, over a decade at J.P. Morgan Asset Management. While trading stocks allowed me to buy or sell, with options I could express a variety of views. That "optionality" creates a powerful investment tool which, combined with strong risk management and portfolio construction, may deliver outcome-orientated strategies.
The lesson that's stayed with me is simple: use options in a disciplined way, design strategies thoughtfully and focus on delivering outcomes investors care about.
Income is often a key focus for investors. And income is at the heart of our Equity Premium Income (EPI) ETF strategies, which use index options to aim to generate consistent income alongside dividends. Paired with actively managed equity portfolios, these ETFs can garner some equity market gains and aim to generate additional income in volatile markets, with the potential for experiencing smaller drawdowns than the index.
Income comes from two distinct sources: dividends from actively managed equity portfolios, and premiums earned from a disciplined options overlay strategy.
A straightforward approach
While using options may sound complicated, the approach is straightforward: by selling index call options, we receive premiums – income for providing the right to exercise the options. By agreeing to sell equity holdings at a set price within a set period, we earn additional income in exchange for limiting potential market gains.
The result: strategies that aim to generate higher income, participate in market gains, and may help reduce overall portfolio volatility by using option income to support returns1.
The EPI ETFs come into their own and may present enhanced income opportunities in volatile markets. When markets get more volatile, options buyers tend to pay higher premiums, which translates into potentially higher income for investors. We target a specific option delta rather than a fixed strike price, so when volatility rises, our expected premium income may increase as well.
In April 2025, the "Liberation Day" announcement jolted investors. Market volatility rose sharply after the announcement, affecting investor portfolios in various ways. Our approach is built for those moments, helping investors stay invested with income potentially offsetting some downside. Elevated volatility translated into stronger income distributions for our strategies.
Trading some upside for income
However, we remain candid about the trade-off and recognise there are periods that these ETFs will find more challenging. For example, in the narrow, momentum-led rally through 2025, our approach lagged a full-beta, no-income strategy. That's the "bird in the hand" trade: income today in exchange for limiting potential future gains.
But markets don't stay narrow forever and can change over time. Our equity teams see earnings broadening across regions and sectors beyond the biggest US technology names. We believe our EPI active ETFs are well positioned to participate in market gains while delivering income opportunities. Investors may choose from global and US options ( JEGA and JEPI) with lower-beta portfolios, and our Nasdaq option ( JPEQ).
As we move through 2026, the macro backdrop looks constructive: above-trend global growth, easing recession risks and room for one more Federal Reserve rate cut. A softer US dollar and improving European purchasing managers indices support international assets. Ongoing volatility tied to Middle East conflicts could also potentially result in higher option premiums.
Conclusion
At times like these, I'm reminded of my first options class. While I didn’t fulfil my childhood dream of becoming a doctor, I learned that options — when used aptly — can turn market noise into a plan. We believe these active, income-led equity ETF strategies help investors stay invested through the cycle while generating income along the way.