COVERED CALL ETFs
Balancing Growth and Income
FEPI · AIPI · CEPI
The Strategy
How It Works
Own the Underlying Stocks
REX Covered Call ETFs hold the stocks within a specific index, offering the potential for NAV appreciation while also capping gains.
Write Covered Calls
REX Covered Call ETFs sell out-of-the-money call options on each individual stock in the portfolio, leveraging the volatility of each stock to potentially yield higher premiums.
Balanced Growth & Income
REX Covered Call ETFs seek to provide a balance between NAV appreciation and dividend income, distributing monthly payouts with no K-1 forms.
Our Funds
The Funds
Three thematic indices. One stock-level covered call strategy. Each fund targets a distinct sector while applying REX’s individual-stock approach for monthly income.
FEPI
FANG & Innovation
Solactive FANG & Innovation Index — ~15 stocks focused on the largest tech and innovation leaders.
| OTM-ness | Up to 10% |
| Distribution Rate* | 25.20% |
| SEC Yield** | -0.40% |
AIPI
Artificial Intelligence
BITA AI Leaders Select Index — ~20 stocks at the forefront of AI technologies.
| OTM-ness | Up to 10% |
| Distribution Rate* | 34.80% |
| SEC Yield** | -0.26% |
CEPI
Crypto & Digital Payments
BITA Crypto Assets & Digital Payments Index — ~25 stocks in crypto mining, trading, and blockchain.
| OTM-ness | Up to 10% |
| Distribution Rate* | 41.26% |
| SEC Yield** | -0.50% |
*As of 10/31/25. The Distribution Rate is the annual yield an investor would receive if the most recently declared distribution remained the same going forward. Distributions are not guaranteed. FEPI’s current distribution consists of 100% return of capital (ROC). AIPI and CEPI’s current distributions consist of 100% estimated return of capital (ROC). **As of 10/31/25. The 30-Day SEC Yield represents net investment income, which excludes option income. The REX FANG & Innovation Equity Premium Income ETF has a gross expense ratio of 0.65%.
Overview
The Covered Call Strategy
REX Covered Call ETFs combine stock exposure with the potential for enhanced income by harnessing volatility through option-based income strategies. Each fund targets a distinct thematic index while applying REX’s stock-level covered call approach for monthly income.
Illustrative monthly returns assuming a 7% OTM strike and monthly call premium of 2% (100% coverage). Premiums vary based on market and individual stock volatility. For illustration purposes only.
Individual Stock Focus
REX Covered Call ETFs write calls on each individual stock rather than the broad index, maximizing premium potential by capturing the full implied volatility of each position.
Strategic Call Writing
REX Covered Call ETFs focus on out-of-the-money calls to enhance premiums and optimize risk management, leaving more room for equity appreciation.
Tax Efficiency
100%
of AIPI’s 2025 distributions were Return of Capital
For 2025, 100% of AIPI’s distributions were classified as Return of Capital (ROC). Return of capital is a distribution classified as a return of the investor’s original investment — it is not considered income and is not immediately taxable. ROC reduces cost basis, deferring taxes until shares are sold. If held over one year, gains may be taxed at favorable long-term capital gains rates (0%, 15%, or 20%). For investors who reinvest distributions, this can raise cost basis incrementally over time, further minimizing future tax liability. The information presented is not intended to be tax advice. Investors should consult with a qualified tax professional.
Market Scenarios
Covered Call Outcomes in Different Markets
How covered call strategies perform across market regimes — from strong uptrends to downtrends.
Strong Uptrend: Upside is capped at the call strike level, though income is still earned from premiums collected.
Modest Uptrend (Ideal): Both premium income and stock price appreciation below the strike level are captured.
Sideways Market: Volatility is harvested for income while the underlying position remains roughly flat.
Downtrend: Income from selling calls helps cushion losses, offsetting some or all of the price depreciation.
For illustrative purposes only.
Our Edge
Why We Believe Stock-Level Changes Everything
Most covered call ETFs write a single option on a broad index. REX takes a fundamentally different approach — writing calls on each individual stock in the portfolio. This unlocks advantages in premium capture, strike selection, and risk management that index-level strategies simply can’t match.
01
Higher Premiums From Individual Stock Volatility
Stock-level volatility is persistently higher than index-level volatility because diversification dampens the index. By writing calls on individual securities, REX captures the full implied volatility of each position — translating to richer premiums and higher potential income.
02
Volatility Is Your Edge, Not Your Enemy
The relationship between volatility and option yield is non-linear and convex. A 50% drop in implied volatility can lead to a 75–90% decline in option premium. REX targets high-IV names to efficiently harness this relationship.
03
OTM Strike Flexibility May Preserve More Upside
Because individual stock IV is higher, REX can write calls further out-of-the-money while still generating meaningful premium — leaving more room for equity appreciation.
04
Natural Diversification in the Options Book
Writing calls on a basket of individual stocks creates natural diversification. Prices are imperfectly correlated — the portfolio isn’t subject to binary all-or-nothing outcomes.
Volatility is Not a Linear Driver
A 50% drop in implied volatility can lead to a 75–80% decline in option premium — especially at lower IV levels.
Active Strike Management Matters
Actively managing strike selection helps balance income and upside — even with a fixed coverage ratio like 50% or 100%.
REX Targets High-IV Names
REX’s concentrated approach targets high-IV names to efficiently harness the convex relationship between volatility and premium potential.
Why Strike Flexibility Matters
At 25% Implied Volatility
Writing closer to-the-money may only generate ~2.5% yield. Moving to a 105 strike cuts yield by more than half (~1.2%), making the trade-off steep.
At 50% Implied Volatility
The same strike shift results in only a ~25% drop in yield (from ~5.4% to ~3.9%), enabling more upside with minimal income loss.
REX’s Approach
Prioritizes high-IV names, allowing greater strike flexibility in elevated volatility regimes, maximizing efficiency in balancing income and upside.
Source: REX Shares. For illustration purposes only.
The Volatility Edge
FEPI Constituents: 5-Year Avg. Implied Volatility
Individual stock volatility far exceeds index-level volatility — the structural advantage that drives REX’s premium capture.
Source: Bloomberg data as of 10/31/2025. Average (5 years) 1M Call Implied Volatility at 25 Delta.
Stay Connected
Simple. Powerful. Strategic.
Get in Touch
REX Shares is an innovative ETP provider that specializes in alternative-strategy ETFs and ETNs. The firm created the MicroSectors and co-created the T-REX product lines of leveraged and inverse tools for traders and recently launched a series of option-based income strategies.
Schedule a time to talk to a team member or submit a form.
Send Us a Message
Questions? Our team is here to help.
"*" indicates required fields
Important Information
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. Returns for performance for one year and under are cumulative, not annualized. Short term performance, in particular, is not a good indication of the fund’s future performance, and an investment should not be made based solely on returns. For additional information, see the fund(s) prospectus. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance can be obtained by calling 1-844-802-4004. The average annual total return figures reflect the reinvestment of dividends and capital gains, if any.
Shares of the REX Shares ETFs are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.
Investing in the Funds involves a high degree of risk. As with any investment, there is a risk that you could lose all or a portion of your investment in the Funds.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the REX Shares. To obtain a Fund’s prospectus and summary prospectus call 844-802-4004. A Fund’s prospectus and summary prospectus should be read carefully before investing.
THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.
The Fund’s investment exposure is concentrated in the same industries as that assigned to the underlying securities. Some or all of these risks may adversely affect the Fund’s net asset value (“NAV”) per share, trading price, yield, total return, and/or ability to meet its investment objective.
The value of the Fund, which focuses on underlying securities in the technology sector, may be more volatile than a more diversified pooled investment or the market as a whole and may perform differently from the value of a more diversified pooled investment or the market as a whole.
Sector Concentration Risk. The trading prices of the Fund’s underlying securities may be highly volatile and could continue to be subject to wide fluctuations in response to various factors. The stock market in general, and the market for technology companies in particular, where applicable, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
Liquidity Risk. Some securities held by the Fund, including options contracts, may be difficult to sell or be illiquid, particularly during times of market turmoil.
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments.
Call Writing Strategy Risk. The path dependency (i.e., the continued use) of the Fund’s call writing strategy will impact the extent that the Fund participates in the positive price returns of the underlying reference securities.
Distribution Risk. As part of the Fund’s investment objective, the Fund seeks to provide current monthly income. There is no assurance that the Fund will make a distribution in any given month.
NAV Erosion Risk Due to Distributions. When the Fund makes a distribution, the Fund’s NAV will typically drop by the amount of the distribution on the related ex-dividend date.
The Solactive® FANG Innovation Index includes 15 highly liquid stocks focused on technology. These large, tech-enabled equity securities are all listed and domiciled in the U.S. The Index is comprised of eight core-components Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Alphabet (GOOGL), Microsoft (MSFT), Netflix (NFLX), NVIDIA (NVDA), Tesla (TSLA) AND the seven top traded names across the technology sector.
The BITA AI Leaders Select Index is a rules-based composite index that tracks the market performance of companies, listed on recognized exchanges based in the US, that are at the forefront of AI technologies.
The BITA Crypto Assets and Digital Payments Index is a rules-based composite index that tracks the market performance of 25 companies, listed on recognized exchanges based in the US, that are actively engaged in crypto-related activities such as cryptocurrency mining, trading, custody, blockchain technology development, and the creation of digital payment solutions.
Out of the Money Option: An out of the money call option has a strike price that is higher than the price of the underlying asset.
Call Option: Call options are financial contracts that give the buyer the right—but not the obligation—to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific period.
Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.
