How the Pros Beat the “High Yield” ETF With a Basic Wheel
9.76% Yield… But Your Balance Drops? Do This Instead
On yesterday’s Profit Panel, the team put a spotlight on a classic trap: a high-yield covered-call ETF that pays while its Net Asset Value (NAV) keeps sliding.
Jack Carter called it out as a “yield trap,” and Jeffry Turnmire showed a plain-English alternative he’s running himself: a simple “wheel Strategy” on IBIT (sell puts → if assigned, sell calls until called away… repeat).
It might not be flashy, but it’s steady cash flow with rules you can actually follow.
What the team saw in the ETF
Covered-call ETFs promise income by selling calls against a stock or group of stocks. That can look great on a yield page, but two things matter more than the headline number:
- Drift: If the underlying trends down, the fund can pay you a yield while your principal shrinks. Jack’s phrase: “Another high yield with another dropping NAV.”
- Fees & frictions: The fund takes a cut (0.75% in this case), but you still have to live with the underlying stock’s wobble.
- Liquidity issues (for options on some crypto ETFs): Jeffry flagged no weekly options and wide bid-ask spreads (about 20 cents in places) as non-starters. His point: you can lose a chunk just crossing the spread.
The DIY fix: The Wheel, in plain English
The Wheel is just two steps you repeat over and over:
- Sell a cash-secured put at a strike where you’d be happy to own the shares. You’re paid today for making that promise. If the stock’s price stays above your strike by the expiration date, the option expires worthless and you keep the cash. Then just keep selling puts.
- If and when you get assigned, sell a covered call on the shares you were assigned. You get paid again for agreeing to sell at the price of your choice. If called away, you exit at a gain and go back to step 1.
Jeffry walked through a real, live example he’s running on IBIT:
- “Sold 4 [puts] for 60 cents a piece.”
- “One of them assigned me 100 shares.”
- “I turned around and sold a call [the next time the stock popped]… collected 37 more bucks on that.”
The message wasn’t “copy this ticker.” It was own the process: get paid to set your entry, then get paid to set your exit. Keep size small and the promises realistic.
Why the Wheel can beat ETFs when done carefully
- You control the strikes and timing. You pick where you’re willing to own and where you’re willing to sell.
- No skimming. You’re not paying a fee to a fund. The premium you collect goes to you.
- Risk is visible. With cash-secured puts, you’ve already set aside the money to buy shares if assigned. With covered calls, you’re capped on the upside you agree to sell — on purpose.
Simple guardrails the pros emphasized
- Only sell puts at prices you truly want to own. If the stock dips there, don’t consider assignment a failure — it’s your plan.
- Mind liquidity. Tight spreads and weekly expirations make entries/exits cleaner. If spreads are wide, credits can vanish in slippage.
- Keep it small. One contract at a time is fine. You can always repeat next week.
- Know the tax/IRA rules for your account type before you start.
Takeaway
A big yield doesn’t mean you’re winning if your balance keeps shrinking. Using the Wheel strategy flips that script: get paid to wait, get paid to own, and keep the rules simple enough to run week after week.
Click here to watch the on-demand replay!
To your prosperity,
The ProsperityPub Team
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