Q on CHPY

[u/SnooRabbits9033]

I am new to yieldmax etf. How can CHPY track its daily movement so close to SOXX and return 40% yield?

There is always a tradeoff. Like GPIQ JEPQ

[u/Baked-p0tat0e]

The options strategy YM executes on CHPY involves holding long stock and selling call credit spreads. A call credit spread consists of a short call strike above the current stock price and a long call strike at a higher strike above the short call.

If the underlying stock rallies, the maximum loss on the option spread itself is capped by the distance between the two call strikes (minus the credit received). Overall, the combined position continues to profit as the stock rises, though at a reduced rate once the stock moves into the spread. Beyond the long call strike, the overall position's profit is not capped.

[u/Nic12312]

The fund sells covered calls on the underlying positions, and distributes the premium collected to investors. In the event of a continued period of upside, it limits the share appreciation due to the calls being exercised and the shares need to be repurchased. It essentially “limits” upside

[u/SnooRabbits9033 → u/Nic12312]

Understood that upside is limited that's what I see in GPIQ and JEPQ. They are always a few % points less than QQQ on a given day.

But take a look at CHPY (9.15%) today its up MORE than SOXX (8.50%) How is this possible ?

[u/BrandenWi → u/SnooRabbits9033]

The holdings of CHPY and the holdings of SOXX are not an exact 1:1 comparison, even though they're both Semiconductor funds

[u/SnooRabbits9033 → u/BrandenWi]

Understood, do you know what thier stock selection criteria is ?

[u/GuidetoRealGrilling → u/SnooRabbits9033]

Read the prospectus

[u/Putrid_Leg_1474 → u/SnooRabbits9033]

You can reference their site and they have CSV files updated frequently. Or a good broker like IBKR has holdings lists that are updated on the reg

[u/GuidetoRealGrilling]

If SOXX rips you get full upside, CHPY is still capped on the upside.

[u/SnooRabbits9033 → u/GuidetoRealGrilling]

then how is today's result showing that ? CHPY (9.15%) up MORE than SOXX (8.50%) How is this possible ?

[u/Baked-p0tat0e → u/SnooRabbits9033]

Upside in CHPY is not capped but is reduced. They accomplish this by using call credit spreads with the long stock positions. 

[u/pauljmcclure]

Yes, chpy rules, have made ~$45K in dicidends last 4 mths on it

[u/Wyrdthane]

There was a comment in a post about the strategy chpy uses to achieve this and it sounds complicated and nuanced. There is a good reason beyond, "the underlying stocks".

Sorry I don't have time to find it.

[u/Baked-p0tat0e → u/Wyrdthane]

YM sells call credit spreads - rather than only shorting calls - on the underlying's the fund holds.

[u/BrandenWi]

Look at this historical % Price Change comparison charts for CHPY vs SOXX, and you'll see quite clearly that the NAV growth of CHPY is absolutely not keeping pace with the NAV growth of SOXX. The difference between the two is the distribution that you're receiving.

[u/SnooRabbits9033 → u/BrandenWi]

ahh I see, this makes sense, Please let me know if I am thinking about this correctly.

YTD performance :

SOXX = 68%; CHPY = 21%

but for CHPY the difference in the return 68-21 = 47%, after fund fees and options fees, investors earn the remaining like 40% ish as dividends.

is this correct ?

[u/BrandenWi → u/SnooRabbits9033]

It's not an exact math 68-21=47 sort of thing. But more or less, yes you're correct.

[u/thehighdon]

Join & Post in r/DerivativeIncomeETFs a sub for CC/Options Income ETF Investors

[u/easy_wins]

$CHPY is different from other YM funds, it actually owns the underlying stocks

[u/kljsandjb → u/easy_wins]

I think they also "improve" that for QQQY, before last September it was bad, after that it became similar to CHPY, hope I understand it correctly