While trading stocks allowed me to either buy or sell, with options I could express a variety of different views. It’s that “optionality” that creates a powerful investment tool, which when used in combination with strong risk management and portfolio construction, can deliver a range of outcome-orientated strategies.

I’ve now spent almost 40 years trading options, with over a decade at J.P. Morgan Asset Management. In all that time, the lesson that’s stayed with me is a simple one: use options in a disciplined way, design strategies thoughtfully and focus on delivering outcomes investors care about.

Income as the outcome

When it comes to investment outcomes, there is no greater focus for investors than income. Unlike value or growth, income is one of those things that never goes out of style and always finds its place in a portfolio. Income is at the heart of the Equity Premium Income ETF strategies that I manage, which use index options to generate consistent income in addition to dividends. Paired with actively managed equity portfolios, these innovative ETF strategies participate in some equity market upside and have the potential to enjoy increased income during volatile markets, all while offering less downside participation than the index.

Income comes from two distinct sources: dividends from actively managed equity portfolios, and premiums earned from a disciplined options overlay.

Using options to generate income can sound complicated but the approach is straightforward: by selling index call options, we can earn a steady flow of “premiums” — immediate income paid for the right to exercise those options. Put another way, by agreeing to sell our equity holdings for a set price within a set period, we earn extra income in exchange for capping some market upside participation. This premium income supplements the income earned from dividends.

The result are strategies that can generate high levels of income, participate in some equity market upside—but not all—and, thanks to the high level of income acting as a floor for returns, offer exposure to less of the downside when markets fall. 

More volatility, higher premiums

As we would expect, the Equity Premium Income ETFs have really come into their own in more volatile markets. When markets get noisy, options buyers pay more for certainty and those higher premiums mean higher income for our investors. We target a specific delta (the likelihood of options being exercised), rather than a fixed strike price, so that when volatility increases, so does our expected premium income and our potential upside.

One episode of volatility that we’ve seen was in April 2025, when “Liberation Day” headlines jolted investors. Those who stayed invested were rewarded but those who sold into the volatility missed a big chunk of that year's returns. Our approach is built for exactly those moments and helps investors stay invested – with the income produced helping to offset some downside (and the more conservative equity sleeve in the global and US Equity Premium Income strategies can reduce the impact of drawdowns even further). Around the Liberation Day period, elevated volatility translated into stronger income distributions for our Equity Premium Income ETF strategies. 

Trading some upside for income

We’re candid about the income trade-off, however, and recognise that there are periods that these ETFs will find more challenging. For example, in the narrow, momentum-led rally that we saw more broadly through 2025, our income-seeking approach and options overlay strategy lagged relative to a full-beta, no-income approach. That’s the “bird in the hand beats two in the bush” trade: investors receive income today, in exchange for capping a slice of future upside.

But markets don’t stay narrow forever. Our equity teams see earnings broadening across regions and sectors, with more balanced contributions beyond the biggest US technology names. As markets reopen to a wider set of winners, we believe our range of Equity Premium Income Active ETFs are well positioned to capture more of the upside while continuing to pay out income. Investors can choose from our global and US equity premium income options (JEPG and JEPI), which offer more conservative, lower beta underlying equity portfolios, as well as our growth/tech-oriented Nasdaq option (JEPQ) and our Europe equity option (JEPE), which are constructed to have similar underlying equity risk profiles to the markets in which they invest (beta = 1).

As we move through 2026, the underlying macro backdrop is constructive: modestly above-trend global growth, tempered recession risks and scope for one more cut from the Federal Reserve. A softer US dollar and improving European purchasing managers’ indices (PMIs) add support for international assets and the euro. Valuation pressure is lighter outside the US and we see scope for equity returns to broaden across sectors of the market as local investment translates into growth. However, were we to see continued volatility from the conflict in the Middle East and higher energy prices, this could translate into higher income from our strategies.

At times like these, I’ve never forgotten that first options class I took all those years ago. While I may not have fulfilled my dream to become a doctor, what I did learn was that options – when used wisely – can turn market noise into a plan. As volatility ebbs and flows, and market leadership changes, we believe these active, income-led equity ETF strategies can help investors to stay invested through the cycle and generate income along the way.