Covered Call Archives - REX Shares

Understanding Covered Call Income: Premiums, Distributions, and Return of Capital Tax Treatment

Wed, 02 Sep 2026 19:53:29 +0000

Option premiums are a function of expected volatility: the more movement the market anticipates in an underlying security, the more a buyer will pay for optionality. This relationship is the economic foundation of a covered call ETF, which generates its income by selling that optionality.

Since 2020, volatility has run structurally higher. The VIX, which measures implied volatility on the S&P 500, averaged 15.13 in the five years preceding 2020 and 20.87 since, resulting in richer premiums for option writers. While many covered call products capture this volatility at the index level, REX writes its options on individual securities seeking higher premiums while preserving more room for participation by writing options slightly out of the money.

Source: Cboe. VIX averages reflect daily closing values for the periods 1/1/2015–12/31/2019 and 1/1/2020–6/30/2026.

Our equity premium income suite is structured based on this approach: FEPI (REX FANG & Innovation Equity Premium Income ETF), AIPI (REX AI Equity Premium Income ETF), and CEPI (REX Crypto Equity Premium Income ETF).

This post walks through how option premium is designed to be generated, why our distributions are currently classified as majority return of capital, and trade-offs of covered call writing.

Fund Comparison

Each fund holds a basket of individual stocks and sells call options against them.

	FEPI	AIPI	CEPI
Underlying basket	15 equally weighted U.S. large-cap tech stocks	25 U.S.-listed AI companies	25 U.S.-listed crypto-related stocks
Reference index	Solactive FANG & Innovation (SOLFANGT)	BITA AI Leaders Select (BAILSI)	BITA Crypto Assets & Digital Payments (BCADPS)
Gross expense ratio	0.65%	0.65%	0.85%
Inception	10/11/2023	6/4/2024	12/4/2024

REX applies a systematic covered call strategy across diversified portfolios of individual equities. Our ETFs:

Overwrite 100% of the portfolio to capture elevated premiums, while writing slightly out of the money to strive for a balance between income generation and upside participation.
Target short-dated (1-month) expiries to allow frequent repricing of volatility and strikes as market conditions evolve.
Distribute the collected option premium as weekly income, rather than relying on leverage or capital-based enhancements.

Mechanics of Call Writing

A call option gives the buyer the right to purchase a security at a predetermined price, known as the strike price, on or before a specified expiration date. In exchange for granting that right, the seller receives a cash payment, or premium, at the time of sale.

Consider a hypothetical position held at $50 against which a one-month call is written at a $55 strike for a premium of $2:

Underlying below $55 at expiration. The option expires worthless. The seller retains both the shares and the $2 premium.
Underlying above $55 at expiration. The option is exercised and the shares are delivered at $55. The seller realizes $5 of appreciation plus the $2 premium, for a maximum outcome of $7. Appreciation beyond $55 accrues to the option buyer.
Underlying declines. The $2 premium is retained and offsets a portion of the decline, lowering the effective breakeven to $48.

The economic substance of the transaction is an exchange of contingent future appreciation for certain income today. A covered call ETF executes that exchange systematically and continuously across a portfolio of positions, distributing the premium collected to shareholders.

The term “covered” denotes that the fund already holds the shares against which the options are written. The fund is therefore never obligated to acquire the security in the open market on unfavorable terms in order to satisfy an exercised contract.

Single-Name Overwriting Versus Index Overwriting

Most covered call ETFs write options on a broad index, typically the S&P 500 or the Nasdaq-100, whereas REX writes options on each portfolio constituent individually.

Single-name options are priced at higher implied volatilities than index options. An index aggregates the idiosyncratic risk of its constituents, much of which diversifies away, so the index realizes lower volatility than its average member. An individual issuer has no such offset. Earnings results, product cycles, and management transitions transmit directly to the security, and option buyers pay for that dispersion.

Higher implied volatility translates into greater premium capture. It also features a second, less apparent advantage: the capacity to write further out of the money. The table below shows estimated monthly premium at strikes 1% and 5% above spot at two levels of implied volatility:

Implied volatility	Strike 1% above spot	Strike 5% above spot	Effect of moving the strike further out
25%	~2.5%	~1.2%	Premium declines by more than half
50%	~5.4%	~3.9%	Premium declines by approximately 25%

Source: REX Shares. Hypothetical illustration of option pricing on a 30d call; not fund performance. For illustrative purposes only. Investing involves risk, including loss of principal.

In low-volatility conditions, moving the strike further out of the money forfeits more than half of the available premium, which pressures a manager toward near-the-money strikes and correspondingly tight caps on participation. At elevated volatility levels, the same adjustment costs roughly a quarter of the premium. Higher-volatility underlying stocks therefore allow strikes to be set further above spot while still generating economically meaningful income, preserving more room for appreciation before the cap binds. That is the rationale for writing calls on individual names rather than on an index.

Premium Capture Relative to Distributions

Over the trailing twelve-month period, monthly premium collected exceeded monthly distributions paid in each of the three funds, averaging:

	Avg. excess retained in NAV
FEPI	0.91%
AIPI	0.76%
CEPI	0.98%

Source: REX Shares as of 7/31/2026.

Distributions are not guaranteed, are declared at each Fund’s discretion, and the amounts will likely vary greatly from one distribution to the next. There is no assurance that premium collected will continue to exceed distributions paid.

Each Fund’s current Distribution Rate is shown below alongside its 30-Day SEC Yield:

	Distribution Per Share	Distribution Rate (as of 8/18/2026)	30-Day SEC Yield (as of 7/31/2026)
FEPI	$0.2047	25.22%	-0.32%
AIPI	[PENDING — AIPI]	34.78%	-0.28%
CEPI	[PENDING — CEPI]	43.45%	-0.50%

Source: REX Shares. Distribution Rate as of 8/18/2026; 30-Day SEC Yield as of 7/31/2026. The Distribution Rate is a non-standardized yield and is not indicative of future distributions.

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 so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent month-end can be obtained by calling 844-802-4004. 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 standardized performance, please visit each Fund’s page at rexshares.com.

Distribution Rate (as of 8/18/2026): The Distribution Rate is the annual rate an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by fifty-two (52), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. Current distributions consist of 100% estimated return of capital (ROC) for all three funds. ROC is not taxable in the year received and reduces an investor’s cost basis. Distributions are not guaranteed, are declared at the Fund’s discretion, and the amounts will likely vary greatly from one distribution to the next. For full details on the composition of distributions, please refer to each Fund’s latest 19a-1 notice. Final determination of a distribution’s tax character will be made on Form 1099-DIV.

30-Day SEC Yield (as of 7/31/2026): The 30-Day SEC Yield represents net investment income, which excludes option income, earned by such ETF over the 30-Day period, expressed as an annual percentage rate based on such ETF’s share price at the end of the 30-Day period.

Over this period, distributions were funded from premium the strategy generated rather than in excess of it.

The Trade-Off: Capped Participation

Writing a call caps participation in the underlying at the strike price and the consequence of that cap varies with the market environment:

Declining markets. Premium collected offsets a portion of the decline. The funds remain exposed to losses on their holdings, though less so than an equivalent position carrying no premium.
Range-bound markets. Premium is collected while the underlying holdings are flat. This is the environment to which the structure is best suited.
Modestly rising markets. The funds collect premium and participate in appreciation up to the strike price.
Sharply rising markets. Participation is capped at the strike for that expiration. Premium is still collected, but appreciation above the strike does not accrue to the fund. This is the principal cost of the strategy, and in a sustained rally it can produce meaningful underperformance relative to holding the same securities outright.

Because the options are reset monthly, the cap resets monthly as well. A single strong month constrains that month’s return rather than imposing a permanent limitation.

Return of Capital Tax Classification

It is important to note that return of capital is a tax concept not an economic concept. An ETF distribution is classified as ROC to the extent it exceeds a fund’s taxable income for the year, and a covered call fund can generate limited taxable income.

Two mechanics drive that. Option premium is received as short-term gain, but calls that finish in the money are closed or settled at a loss, and those realized losses on the short call leg offset much of the premium. The equity leg, meanwhile, turns over slowly, so appreciation in the underlying holdings goes largely unrealized. The result is a fund distributing substantial cash while reporting limited taxable income, and the excess is characterized as return of capital.

The return of capital label by itself proves nothing about the health of the strategy. The same characterization arises whether distributions are funded by premium the strategy earned or by liquidating holdings to meet a distribution the strategy did not cover. Total return, not the tax character of the distribution, is what distinguishes the two, and an investor should read NAV over time alongside the distributions received.

ROC distributions are generally not taxable in the year received. They reduce cost basis, deferring taxation until the position is sold. Where shares have been held more than one year, the resulting gain is generally taxed at long-term capital gains rates, below ordinary income rates for most investors.

As an example, consider a $100,000 position paying a 25% annual distribution classified entirely as return of capital. Assuming no change in NAV and no reinvestment, basis is reduced by approximately $25,000 each year — to $50,000 after two years and $25,000 after three — and is exhausted in roughly four. At the higher distribution rates shown above, basis is exhausted faster still: under three years at 35% and roughly two and a half years at 43%. Once basis reaches zero, subsequent return of capital distributions are taxed as capital gains. The deferral is real, but it has a defined endpoint.

Investors with estate planning considerations should note one additional feature. Shares passing to heirs generally receive a step-up in basis to fair market value at the date of death, resetting prior ROC-related basis reductions. Treatment depends on individual circumstances, and investors should consult a tax adviser.

Standard Performance

As of 7/31/2026. Market price and NAV returns are shown for identical periods.

		1 Mo.	3 Mo.	6 Mo.	YTD	1 Yr.	Since Incep. (ann.)
FEPI (10/11/2023)	Market	-5.49%	-3.05%	1.26%	-0.27%	10.75%	16.15%
FEPI (10/11/2023)	NAV	-5.51%	-3.11%	1.23%	-0.28%	10.64%	16.38%
AIPI (6/4/2024)	Market	-3.57%	3.83%	6.95%	4.07%	12.58%	16.69%
AIPI (6/4/2024)	NAV	-3.64%	3.65%	6.80%	4.00%	12.65%	16.79%
CEPI (12/4/2024)	Market	-4.69%	4.39%	12.36%	15.20%	15.91%	9.43%
CEPI (12/4/2024)	NAV	-4.69%	4.22%	12.47%	15.08%	15.94%	10.93%
S&P 500		-0.06%	4.19%	7.98%	10.14%	19.56%	22.72% since FEPI inception 18.98% since AIPI inception 14.77% since CEPI inception

Source: Bloomberg as of 7/31/2026. Gross expense ratios: FEPI 0.65%, AIPI 0.65%, CEPI 0.85%. S&P 500 returns are index returns and do not reflect fees or expenses.

Standardized performance, full fund details, holdings, and disclosure documents are available at rexshares.com/fepi, rexshares.com/aipi, and rexshares.com/cepi.

Market Price: The current price at which shares are bought and sold. Market returns are based upon the last trade price.

NAV: The dollar value of a single share, based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding. Calculated at the end of each business day.

Definitions

Cboe Volatility Index (VIX): An index calculated and published by Cboe Global Markets that measures the market’s expectation of 30-day forward-looking volatility of the S&P 500 Index, derived from the prices of S&P 500 Index options.

Solactive FANG Innovation Index (SOLFANGT): FEPI’s reference index. An index maintained by Solactive AG comprising 15 equally weighted U.S.-listed technology stocks — eight core large-cap names plus seven additional top-traded technology stocks selected from designated FactSet industries. The Index is rebalanced monthly and reconstituted quarterly.

BITA AI Leaders Select Index (BAILSI): AIPI’s reference index. A rules-based index maintained by BITA comprising 25 U.S.-listed companies engaged in artificial intelligence across four thematic subcategories: AI hardware, AI software, AI enabling infrastructure, and AI services.

BITA Crypto Assets and Digital Payments Index (BCADPS): CEPI’s reference index. A rules-based index maintained by BITA comprising 25 U.S.-listed companies engaged in crypto-related activities — blockchain technology, crypto asset management and trading, crypto banking and payments, and crypto mining — together with digital payment systems. Constituents are weighted by 12-month average daily traded volume subject to a 5% issuer cap, rebalanced monthly and reconstituted quarterly.

S&P 500 Index: A market-capitalization-weighted index of 500 leading U.S. publicly traded companies. The Index does not employ an option strategy.

Indexes referenced in this material are unmanaged, cannot be invested in directly, and do not reflect any management fees, transaction costs, or expenses.

Important Disclosures

This material must be preceded or accompanied by a prospectus. Please read the prospectus carefully before investing. Prospectuses: FEPI, AIPI, CEPI.

Index Comparison: The S&P 500 is an unmanaged index, cannot be invested in directly, and does not employ an option strategy. Index returns do not reflect any management fees, transaction costs, or expenses.

THE FUNDS, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUNDS’ UNDERLYING SECURITIES.

Important Risk Information: 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.

Sector Concentration Risk. The trading prices of the Funds’ 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.

Industry Concentration Risk. In following its methodology, each Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or industry group. To the extent that an Index concentrates in the securities of issuers in a particular industry or industry group, the Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or industry group, a Fund may face more risks than if it were diversified broadly over numerous industries or industry groups.

Liquidity Risk. Some securities held by the Funds, 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 Funds’ investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or a Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Call Writing Strategy Risk. The path dependency (i.e., the continued use) of a Fund’s call writing strategy will impact the extent that the Fund participates in the positive price returns of the underlying reference securities and, in turn, the Fund’s returns, both during the term of the sold call options and over longer time periods.

Price Participation Risk. Writing covered call options limits a Fund’s participation in the appreciation of its underlying holdings above the strike price of the options written.

High Portfolio Turnover Risk. The Funds may actively and frequently trade all or a significant portion of their holdings. A high portfolio turnover rate increases transaction costs, which may increase a Fund’s expenses.

Non-Diversification Risk. Because each Fund is non-diversified, it may invest a greater percentage of its assets in the securities of a single issuer or a smaller number of issuers than if it was a diversified fund.

Distribution Risk. As part of each Fund’s investment objective, the Fund seeks to provide current weekly income. There is no assurance that a Fund will make a distribution in any given week. If a Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. Additionally, the distributions, if any, may consist of returns of capital, which would decrease the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

NAV Erosion Risk Due to Distributions. When a Fund makes a distribution, the Fund’s NAV will typically drop by the amount of the distribution on the related ex-dividend date. The repeated payment of distributions by a Fund, if any, may significantly erode the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Crypto Asset Risk (CEPI). While the Fund will not invest directly in a crypto asset, the value of the Fund’s investments in publicly traded securities of companies engaged in crypto asset-related businesses and activities are subject to fluctuations in the value of a crypto asset, which may be highly volatile. Crypto assets are relatively new, and their value is influenced by a wide variety of factors that are uncertain and difficult to evaluate. Federal, state and/or foreign governments may restrict the use and exchange of crypto assets, and regulation in the U.S. is still developing.

Solactive AG (“Solactive”) is the licensor of the Solactive FANG Innovation Index. The financial instruments that are based on the Index are not sponsored, endorsed, promoted or sold by Solactive and Solactive makes no express or implied representation, guarantee or assurance with regard to: (a) the advisability in investing in the financial instruments; (b) the quality, accuracy and/or completeness of the Index; and/or (c) the results obtained or to be obtained by any person or entity from the use of the Index.

REX is a registered trademark of REX Shares, LLC (“REX”), which has been licensed for certain purposes by the Adviser and the Funds. The Funds are not sponsored, endorsed, or sold by REX, its affiliates (including the Adviser), by Solactive AG, or by BITA, and none of them makes any representation regarding the advisability of investing in such product(s).

The information presented herein is not intended to be tax advice. Return of Capital classification is an estimate and subject to change. Investors should consult with a qualified tax professional to understand the implications specific to their individual circumstances.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with REX Shares, LLC, or its affiliates.

The post Understanding Covered Call Income: Premiums, Distributions, and Return of Capital Tax Treatment appeared first on REX Shares.

REX FANG & Innovation Equity Premium Income ETF (FEPI) July 2026 Commentary

Mon, 17 Aug 2026 14:23:19 +0000

Key Highlights

July Cumulative Distribution	2.45%
Distribution Rate	25.22%
30-Day SEC Yield	-0.32%
July Performance	FEPI: -5.51% \| S&P 500 TR Index: -0.06%
YTD Performance	FEPI: -0.28% \| S&P 500 TR Index: 10.14%
Roll Date	7/14/2026
Premium Income	5.15%
Average Roll Moneyness	~18.0% out-of-the-money (Range: ~17% to 21%)

The 30-Day Yield represents net investment income earned by the Fund over the 30-Day period ended 6/30/2026, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-Day period. The 30-Day unsubsidized SEC Yield does not reflect any fee waivers/reimbursements/limits in effect.

The Distribution Rate is the annual rate an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by 52, and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital and has the potential to change during any given tax year. Please refer to the 19a-1 Notice, which can be located on the Fund’s website, regarding the composition of distributions, including return of capital. Final determination of a distribution’s tax character will be made on Form 1099 DIV.

Average Roll Moneyness: The average distance between each option’s strike price and the underlying stock price at the time of the monthly roll, expressed as a percentage.

Out-of-the-money: A call option is out-of-the-money when its strike price is above the current price of the underlying stock, with the percentage out-of-the-money measured as the difference between the two, expressed as a percentage of the stock price.

Commentary

Implied volatility on the underlying constituents climbed sharply in July, with the weighted average reaching ~60.3% at the mid-month roll, up from ~52.4% in June and the highest level in the trailing twelve months. The richer volatility backdrop drove premium generation of ~5.15% on the July roll, a marked step up from June’s ~3.0% and the highest monthly premium capture on record for the strategy.

Following the July roll, strikes were positioned ~18% out-of-the-money on average (range: ~17% to 21%), meaningfully further out-of-the-money than June’s ~13.5% average, consistent with the elevated implied volatility at the time of strike selection. GOOGL, MSFT, and MU sat closest to their strikes (~17% OTM), while INTC (~21%) and PLTR (~20%) were positioned furthest out.

July continued the weekly distribution cadence, with the Fund paying five weekly distributions, each roughly 0.48% to 0.51% of NAV, consistent with its ~25% annualized distribution profile.

FEPI returned -5.51% in July amid sharp downside dispersion across the basket. SNDK (-47%), INTC (-35%), MU (-29%), and TSLA (-26%) were the largest detractors, while MSFT (+25%) and AMZN (+14%) were the notable standouts. With most names falling well short of their strikes, the elevated ~5.15% premium partially cushioned the drawdown.

Performance Summary

As of 7/31/2026 • Since Inception reflects FEPI’s inception date: 10/11/23

Total Return	1M	3M	YTD	1Y	Since Inception
Market	-5.49%	-3.05%	-0.27%	10.75%	16.15%
NAV	-5.51%	-3.11%	-0.28%	10.64%	16.38%
S&P 500 TR	-0.06%	4.19%	10.14%	19.56%	23.72%

For current standardized performance, click here.

Historical Premium vs. Distribution

July 2026 cumulative distribution 2.45% of NAV across five weekly payments, with 1.84% excess premium retained to NAV. Enable JavaScript to view the interactive chart.

Effective 5/26/26, the Fund transitioned from monthly to weekly distributions.

Source: Bloomberg, Vident, REX. All data as of 7/31/26 unless otherwise stated. Premium income and moneyness are representative of positions initiated on the 7/14/26 monthly option roll.

Top 10 Holdings

Name	Symbol	Weighting
ALPHABET	GOOGL	7.00%
BROADCOM	AVGO	6.95%
APPLE	AAPL	6.89%
NVIDIA	NVDA	6.68%
AMD	AMD	6.04%
MICRON	MU	5.88%
META	META	4.25%
MICROSOFT	MSFT	4.23%
ORACLE	ORCL	4.22%
PALANTIR	PLTR	4.22%

As of 7/31/26. Holdings are subject to change. For a complete list of current fund holdings, click here.

Important Information

Investing in the Fund 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 Fund.

This information must be preceded or accompanied by a prospectus. Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus. Please read the prospectuses carefully before you invest. Investments involve risk. Principal loss is possible. For FEPI prospectus, click here.

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, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

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 and, in turn, the Fund’s returns, both during the term of the sold call options and over longer time period.

High Portfolio Turnover Risk. The Fund may actively and frequently trade all or a significant portion of the Fund’s holdings. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.

New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.

Non-Diversification Risk. Because the Fund is non-diversified, it may invest a greater percentage of its assets in the securities of a single issuer or a smaller number of issuers than if it was a diversified fund.

Distribution Risk. As part of the Fund’s investment objective, the Fund seeks to provide current weekly income. There is no assurance that the Fund will make a distribution in any given month. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. Additionally, the weekly distributions, if any, may consist of returns of capital, which would decrease the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

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 repeated payment of distributions by the Fund, if any, may significantly erode the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Options Contracts. The use of options contracts involves investment strategies and risks different from those associated with ordinary portfolio securities transactions. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including the anticipated volatility, which are affected by fiscal and monetary policies and by national and international political, changes in the actual or implied volatility of the underlying reference security, the time remaining until the expiration of the option contract and economic events.

Money Market Securities Risk. The Fund may invest in money market securities, which are short-term, highly rated fixed income securities. Although money market securities typically carry lower risk than equity securities, return of principal and interest may not be guaranteed.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

The post REX FANG & Innovation Equity Premium Income ETF (FEPI) July 2026 Commentary appeared first on REX Shares.

REX FANG & Innovation Equity Premium Income ETF (FEPI) June 2026 Commentary

Fri, 17 Jul 2026 17:37:39 +0000

REX FANG & Innovation Equity Premium Income ETF (FEPI)

June 2026 Commentary

Key Highlights

6/24/2026 Distribution: 0.49%; Note the fund shifted to weekly distributions in May.

Distribution Rate: 25.63%*

30-Day SEC Yield: -0.36%

June Performance: FEPI: -5.88% | S&P 500 Index: -0.95%

YTD Performance: FEPI: 5.54% | S&P 500 Index: 10.21%

Roll Date: 6/15/2026

Premium Income: 3.00%

Average Roll Moneyness: ~13.5% out-of-the-money (Range: ~10% to 15%)

*The 30-Day Yield represents net investment income earned by the Fund over the 30-Day period ended 6/30/2026, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-Day period. The 30-Day unsubsidized SEC Yield does not reflect any fee waivers/reimbursements/limits in effect.

Average Roll Moneyness: The average distance between each option’s strike price and the underlying stock price at the time of the monthly roll, expressed as a percentage.

Out-of-the-money: A call option is out-of-the-money when its strike price is above the current price of the underlying stock, with the percentage out-of-the-money measured as the difference between the two, expressed as a percentage of the stock price.

Commentary

Implied volatility on the underlying constituents continued to climb in June, with the weighted average reaching ~52.4% at the June ex-dates which is up from ~50.2% in May and at the highest level in the trailing twelve months. The richer volatility backdrop supported premium generation of 3.0% on the June roll.

Following the June 15th roll, strikes were positioned ~13.5% out-of-the-money on average (range: ~10% to 15%), modestly further out-of-the-money than May’s ~11% average, consistent with elevated implied volatility at the time of strike selection. By month-end, all 15 positions remained within their strikes, with post-roll gains led by INTC (+9.2%), SNDK (+7.9%), and AMD (+6.1%).

June marked the first full month under the weekly distribution cadence: the Fund paid four weekly distributions, each between 0.49% and 0.50% of NAV, consistent with its ~25% annualized distribution profile.

FEPI returned -5.88% in June as the underlying constituents pulled back sharply from May’s rally, trailing the S&P 500 TR Index (-0.95%). Dispersion remained across the basket: SNDK (+34%), INTC (+22%), and MU (+19%) were the top performers for the full month, while ORCL (-35%), PLTR (-25%), and NFLX (-17%) were the largest detractors. Premium income provided a partial offset to the equity drawdown, and the concentrated technology exposure underperformed the broader market on the month.

June Constituent Dispersion: Full-Month Leaders and Detractors

Hover or tap a bar for the exact full-month figure.

Source: Bloomberg, Vident, REX. Full-month June 2026 returns of the noted underlying constituents. Past performance is not indicative of future results.

Performance Summary

As of 6/30/2026 • Since Inception reflects FEPI’s inception date: 10/11/23

Total Return	1M	3M	YTD	1Y	Since Inception
Market	-5.75%	13.75%	5.52%	19.89%	19.14%
NAV	-5.88%	13.53%	5.54%	19.73%	19.40%
S&P 500 TR	-0.95%	15.20%	10.21%	22.32%	23.53%

For current standardized performance, click here.

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 so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent month-end can be obtained by calling 1-844-802-4004. The fund’s gross expense ratio is 0.65%.

Historical Premium vs. Distribution

Hover or tap any month to see each weekly distribution, the excess premium retained to NAV, and the total premium for the month.

*Effective 5/26/26, the Fund transitioned from monthly to weekly distributions.

Source: Bloomberg, Vident, REX. All data as of 6/30/26 unless otherwise stated. Premium income and moneyness are representative of positions initiated on the 6/15/26 monthly option roll. Distributions are not guaranteed and past distributions are not indicative of future distributions.

Top 10 Holdings

Hover or tap a bar for the holding name and weighting.

*As of 6/30/26. Holdings are subject to change. For a complete list of current fund holdings, click here.

Important Information

Investing in the Fund 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 Fund.

THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.

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, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

The post REX FANG & Innovation Equity Premium Income ETF (FEPI) June 2026 Commentary appeared first on REX Shares.

The Volatility Gap That Funds FEPI’s Weekly Distributions

Tue, 16 Jun 2026 13:06:04 +0000

For Institutional Use OnlyREX Financial · FEPI

Stock-level implied volatility runs structurally higher than index volatility. FEPI is built to capture that spread — systematically, week over week.

0%Distribution Rate · 05/26/2026

0×Yield / Vol vs. Index Peers

0%2025 ROC Classification

The Core Insight

What Most Covered Call Strategies Miss

The options market prices individual stocks very differently than it prices broad indexes. When investors buy protection on a single stock, they’re paying for the full range of outcomes that stock can produce — earnings surprises, product announcements, management changes, sector rotation.

At the index level, those idiosyncratic risks cancel out. The index option price reflects only what remains after diversification has done its work: meaningfully lower implied volatility, and meaningfully lower premiums for the seller.

A covered call strategy written at the individual stock level collects more premium per contract than one written on an equivalent index position. FEPI is built to put that relationship to work across FANG and innovation names — week over week.

The result is a persistent spread. Single-name implied volatility on large-cap technology and innovation names tends to structurally exceed index implied volatility. That spread translates directly into higher option premiums, higher distribution potential, and a better yield-per-unit-of-risk for allocators.

The Mechanism

Written at the Stock Level. Paid Weekly.

FEPI writes covered calls on a portfolio of FANG and innovation stocks, collecting premium every week. The calls are written out of the money — with strikes set up to 10% above the current price. That structure allows meaningful upside participation before the calls constrain returns, while still generating the premium income that funds weekly distributions.

The fund is equally weighted across the 15 leading U.S. big tech stocks. Writing calls on individual names rather than a single index contract maintains diversification while harvesting the higher implied volatility premium available at the stock level.

Up to 10%OTM Strike CeilingRetains meaningful equity upside before calls cap returns

0%Distribution RateAnnualized · As of 05/26/2026

0%Gross Expense RatioAs of most recent prospectus

How It Stacks Up

FEPI vs. Covered Call Peers

FEPI’s stock-selection approach delivers a distribution rate that meaningfully exceeds index-based peers — while applying the same out-of-the-money discipline. Peer strategies writing on the Nasdaq 100 or S&P 500 capture only what remains after diversification eliminates the individual-name premium.

Distribution Rate Comparison — FEPI vs. Covered Call Peers

Individual Options (REX)Nasdaq 100 OptionsS&P 500 Options

Source: Bloomberg, 6/20/24–4/30/26. Distribution Rate annualizes the most recent distribution divided by NAV. Not a measure of total return. Distributions are not guaranteed.

FEPI

25.6%

AIPI

35.7%

JEPQ

11.4%

QQQI

14.4%

QYLD

12.7%

GPIQ

10.6%

JEPI

8.1%

SPYI

12.3%

XYLD

12.5%

GPIX

8.6%

Yield / Vol Ratio — Risk-Adjusted Income Efficiency

Individual Options (REX)Nasdaq 100 OptionsS&P 500 Options

Higher = more income generated per unit of volatility exposure. FEPI’s 1.9× nearly doubles most index-based peers. Source: Bloomberg, 6/20/24–4/30/26.

FEPI

1.9×

AIPI

2.2×

JEPQ

1.0×

QQQI

1.2×

QYLD

1.3×

GPIQ

0.8×

JEPI

0.9×

SPYI

1.3×

XYLD

1.4×

GPIX

0.8×

Distribution SustainabilityPremiums Exceed Distributions. By Design.FEPI doesn’t pay out everything it collects. The fund targets a distribution below the level the strategy has historically been able to fund — building a buffer that provides structural support through periods when volatility compresses and premiums run lower.A strategy that pays out exactly what it collects in any given month has no such cushion. The spread matters structurally.

Average Monthly Premium vs. Distribution

Source: REX Shares, as of 05/22/2026. Distributions are not guaranteed.

Avg. Monthly Option Premium Collected2.76%

Avg. Monthly Distribution Paid2.13%

Monthly Distribution Support BufferPremium collected above distribution target, per month+0.63% / mo.

The 0.63% gap is not guaranteed to persist — but its presence reflects a deliberate design choice. FEPI sets the distribution target below what the strategy has historically been able to fund, rather than paying out at the ceiling each month.

Tax TreatmentThe ROC Advantage0%of FEPI’s 2025 distributions classified as Return of CapitalROC is a tax treatment, not a measure of economic return. When a distribution is classified as return of capital, it is not treated as ordinary income in the year received — the tax event is deferred until the position is sold. For institutional allocators managing taxable accounts or advising clients in high brackets, the difference is material.

What ROC Is

A distribution classified as a return of the investor’s original investment — not taxable income in the year received

Occurs when an ETF’s distribution exceeds its taxable income (dividends, interest, realized gains, less expenses)

Reduces cost basis, deferring the tax event until shares are sold

The Allocation Advantage

Not immediately taxable — no ordinary income recognition in the year received

Potential deferral to long-term capital gains rates (0%, 15%, or 20%) when shares are eventually sold

For reinvestors, incrementally raises cost basis over time — further minimizing future tax liability

The 94.8% ROC classification reflects FEPI’s 2025 distributions specifically. The precise tax classification depends on the fund’s activity in a given tax year and cannot be guaranteed to repeat. Allocators conducting after-tax income due diligence should review FEPI’s 2025 tax profile against comparable income strategies. This material is not tax advice; consult a tax professional regarding individual circumstances.

Performance At A Glance

Standardized Returns

As of 3/31/2026. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. S&P 500 since-inception return calculated from 10/11/2023 (common inception date with FEPI).

Fund	1 Mo	3 Mo	6 Mo	YTD	1 Yr	Since Inception
FEPI (Total Return)	-2.02%	-7.23%	-3.85%	-7.23%	22.74%	15.09%
FEPI (NAV)	-2.02%	-7.04%	-3.89%	-7.04%	22.77%	15.46%
S&P 500	-4.92%	-4.48%	1.40%	-4.48%	17.78%	19.15%

Source: Bloomberg L.P. as of 3/31/2026. FEPI gross expense ratio: 0.65% (as of most recent prospectus). Index performance does not represent the fund’s performance. It is not possible to invest directly in an index. Since inception represents annualized returns.

Ready to Evaluate FEPI?

Full fund details, standardized performance, and disclosure documents available at REXShares.com

View Fund Details

30-Day SEC Yield (as of 04/30/2026): -0.32%. This figure reflects accounting conventions around option premium recognition and does not represent the income investors receive from distributions. It is calculated differently from the Distribution Rate, and the two figures are not directly comparable.

Distribution Rate as of 05/26/2026. The Distribution Rate is the annual yield an investor would receive if the most recently declared distribution remained the same going forward. It is calculated by multiplying the ETF’s Distribution per Share by twelve (12) and dividing by the ETF’s most recent NAV. The Distribution Rate represents a single distribution and does not represent total return. Distributions are not guaranteed and may vary. Distributions may include return of capital, which reduces an investor’s cost basis and the fund’s net asset value over time.

A covered call strategy limits the fund’s participation in gains on its underlying holdings. Investing involves risk, including possible loss of principal. The fund is non-diversified. Past performance does not guarantee future results. The performance data quoted represents past performance. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. Performance current to the most recent month-end can be obtained by calling 1-844-802-4004.

Investors should carefully consider the investment objectives, risks, charges and expenses of the fund before investing. This and other information can be found in the fund’s prospectus, available at REXShares.com/FEPI. Read the prospectus carefully before investing. Funds distributed by Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC.

REX FINANCIAL · FOR INSTITUTIONAL USE ONLY

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REX Shares Announces Transition to Weekly Distributions for FEPI, AIPI, and CEPI

Wed, 20 May 2026 13:04:53 +0000

REX suite of Equity Premium Income ETFs to move from monthly to weekly distribution frequency

MIAMI, May 20, 2026 — REX Shares (“REX”), a leading provider of innovative exchange-traded products, today announced a change in the distribution frequency for its suite of Equity Premium Income ETFs: the REX FANG & Innovation Equity Premium Income ETF (Nasdaq: FEPI), the REX AI Equity Premium Income ETF (Nasdaq: AIPI), and the REX Crypto Equity Premium Income ETF (Nasdaq: CEPI). The Funds will transition from a monthly to a weekly distribution schedule beginning May 28, 2026.

Impact on the May 28, 2026 Distribution

In connection with the transition to a weekly distribution cadence, the distribution payable on or about May 28, 2026 is expected to reflect a shorter accrual period than a typical monthly distribution. As a result, the May 28, 2026 distribution and subsequent distributions are expected to be smaller in per-share amount than recent monthly distributions for FEPI, AIPI, and CEPI.

About the EPI Suite

The Equity Premium Income suite (FEPI, AIPI, CEPI) is designed to harvest income from elevated volatility in baskets of high-growth, high-volatility names across big tech, AI, and crypto equities. Each Fund holds the stocks within a defined index and writes out-of-the-money calls on the individual names rather than on the broad index, allowing the strategy to capture single-stock volatility premiums. The Funds distribute payouts to investors without the need for K-1 forms.

FEPI applies the strategy to FANG and innovation-leading equities, AIPI to leading artificial intelligence companies, and CEPI to crypto-related equities.

“We’ve seen meaningful investor interest in more frequent income across our broader income lineup, and we’re extending that cadence to the EPI suite,” said Greg King, CEO & Founder of REX Shares. “Moving FEPI, AIPI, and CEPI to a weekly distribution schedule is designed to give investors more frequent income potential and aligns these funds with the rest of REX’s income ETF lineup.”

About REX Shares

REX Shares offers a suite of exchange-traded products built for both active traders and long-term investors, spanning income, thematic, and leveraged strategies. Whether making short-term trades, generating income from volatility, or investing in digital assets and emerging themes like drones, REX empowers investors to act on strong market views.

For more information, please visit www.rexshares.com

REX Media Contact: rexfin@gregoryagency.com

Important Risks

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 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 FUNDS, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.

The value of the Funds, 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.

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 and, in turn, the Fund’s returns, both during the term of the sold call options and over longer time period.

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. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. Additionally, the monthly distributions, if any, may consist of returns of capital, which would decrease the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

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.

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 repeated payment of distributions by the Fund, if any, may significantly erode the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

The post REX Shares Announces Transition to Weekly Distributions for FEPI, AIPI, and CEPI appeared first on REX Shares.

REX FANG & Innovation Equity Premium Income ETF (FEPI) April 2026 Commentary

Thu, 14 May 2026 17:41:56 +0000

REX FANG & Innovation Equity Premium Income ETF (FEPI)

April Recap: Capturing the Rally With Premium Intact

Key Highlights

Performance (April): FEPI: 10.72% | S&P 500 Index: 10.49%
Performance (YTD): FEPI: 2.92% | S&P 500 Index: 5.70%
Premium Income: 2.46%
Distribution: 2.11%
Distribution Rate: 25.21%
30-Day SEC Yield: -0.32% (as of 4/30/2026)
Average Roll Moneyness: ~10% out-of-the-money (Range: ~8%-13%)
Roll Date: 4/14/26
Gross Expense Ratio: 0.65%

The 30-Day Yield represents net investment income earned by the Fund over the 30-Day period ended 4/30/2026, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-Day period. The 30-Day unsubsidized SEC Yield does not reflect any fee waivers/reimbursements/limits in effect.

The Distribution Rate is the annual rate an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital and has the potential to change during any given tax year. Please refer to the 19a-1 Notice, which can be located on the Fund’s website, regarding the composition of distributions, including return of capital. Final determination of a distribution’s tax character will be made on Form 1099 DIV.

Commentary

Implied volatility on the underlying constituents remained elevated in April (~49.8% weighted average), supporting premium generation of ~2.5%. The Fund distributed ~2.1%, consistent with its monthly cadence.
Following the April 14th roll, strikes were positioned ~10.5% out-of-the-money on average (range: ~8%–13%). Despite a sharp rally, 11 of 15 positions remained below their strikes by month-end, with only 4 names — primarily semiconductors — breaching strikes. FEPI’s total return of +10.72% effectively matched the S&P 500 TR Index (+10.49%), demonstrating that the deep OTM positioning allowed the fund to capture nearly all broad market upside while continuing to generate premium income.
The April outcome illustrates the return-path dynamic in reverse relative to March: where post-roll weakness preserved fuller premium capture with minimal opportunity cost, the sharp recovery in April meant some upside was ceded in names that rallied past strikes, with premium income (~2.5%) helping to offset the gap.

Performance Summary

As of 4/30/2026 • Since Inception reflects FEPI’s inception date: 10/11/23

Total Return	1M	3M	YTD	1Y	Since Inception
Market	10.89%	4.74%	2.87%	33.68%	19.30%
NAV	10.72%	4.93%	2.92%	33.55%	19.60%
S&P 500 TR	10.49%	4.19%	5.70%	31.05%	23.39%

For current standardized performance, click here.

April Premium vs. Distribution

Premium (%) represents the total option premium collected as a percentage of fund NAV for that month. Distribution (%) represents the monthly distribution paid to shareholders as a percentage of fund NAV. Distribution Support represents the difference between the average premium collected and the average distribution paid. Past premiums are not indicative of future premiums. Distributions are not guaranteed.

Source: Bloomberg, Vident, REX. All data as of 4/30/26 unless otherwise stated. Premium income and moneyness are representative of positions initiated on the 4/14/26 monthly option roll.

Important Information

Investing in the Fund 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 Fund.

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus. Please read the prospectuses carefully before you invest. Investments involve risk. Principal loss is possible. For FEPI prospectuses, click here.

THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.

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, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

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. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. Additionally, the monthly distributions, if any, may consist of returns of capital, which would decrease the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

The post REX FANG & Innovation Equity Premium Income ETF (FEPI) April 2026 Commentary appeared first on REX Shares.

REX FANG & Innovation Equity Premium Income ETF (FEPI) March 2026 Commentary

Wed, 29 Apr 2026 18:07:52 +0000

REX FANG & Innovation Equity Premium Income ETF (FEPI)

March Recap: Premium Capture Amid Tech Weakness

Key Highlights

Performance (March): FEPI: -2.02% | S&P 500 Index: -4.98%
Performance (YTD): FEPI: -7.23% | S&P 500 Index: -4.33%
Premium Income: 2.95%
Distribution: 2.13%
30-Day SEC Yield: -0.33% (as of 3/31/2026)
Average Roll Moneyness: ~7% out-of-the-money (Range: ~6%-9%)
Roll Date: 3/17/26
Gross Expense Ratio: 0.65%

The 30-Day Yield represents net investment income earned by the Fund over the 30-Day period ended 3/31/2026, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-Day period. The 30-Day unsubsidized SEC Yield does not reflect any fee waivers/reimbursements/limits in effect.

The Distribution Rate is the annual rate an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital and has the potential to change during any given tax year. Please refer to the 19a-1 Notice, which can be located on the Fund’s website, regarding the composition of distributions, including return of capital. Final determination of a distribution’s tax character will be made on Form 1099 DIV.

Commentary

Elevated single-stock volatility in March enabled both strong premium generation (~2.95%) and strike positioning (~7% out-of-the-money), reflecting the strategy’s ability to monetize volatility while maintaining upside potential. The Fund distributed ~2.1%, with excess premium retained and accretive to NAV.
Following the March 17th roll, underlying constituent performance from 3/18–3/31 was broadly negative, with options positions remaining out-of-the-money heading into April and supporting full premium realization. Persistent weakness across holdings post-roll meant dispersion supported premium capture rather than creating opportunity cost in individual names.
This outcome highlights the importance of return path following the roll, as weakness immediately after repositioning limited the typical trade-off of capped upside, with premium income helping to offset negative price returns.
With ~7% OTM strikes and continued weakness into month-end, the portfolio enters April with meaningful upside room before strikes are challenged, reinforcing the strategy’s ability to participate in a recovery while continuing to monetize volatility.

Performance Summary

As of 3/31/2026 • Since Inception reflects FEPI’s inception date: 10/11/23

Total Return	1M	3M	YTD	1Y	Since Inception
Market	-2.02%	-7.23%	-7.23%	22.74%	15.41%
NAV	-2.02%	-7.04%	-7.04%	22.78%	15.46%
S&P 500 TR	-4.98%	-4.33%	-4.33%	17.80%	19.28%

For current standardized performance, click here.

March Premium vs. Distribution

Source: Bloomberg, Vident, REX. All data as of 3/31/26 unless otherwise stated. Premium income and moneyness are representative of positions initiated on the 3/17/26 monthly option roll.

Important Information

Investing in the Fund 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 Fund.

THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.

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, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

The post REX FANG & Innovation Equity Premium Income ETF (FEPI) March 2026 Commentary appeared first on REX Shares.

The REX Covered Call ETF Difference

Wed, 18 Mar 2026 17:55:29 +0000

Covered call strategies have become one of the most popular ways for investors to attempt to generate income from the stock market without giving up their equity positions entirely. But not all covered call ETFs are built the same way. REX Shares takes a different approach — writing options on individual stocks rather than a single broad index — and offers three thematic funds to do it.

Here are seven things investors should know about REX Covered Call ETFs.

1. REX Writes Calls on Individual Stocks, Not the Index

Many covered call ETFs write a single call option on a broad index. REX does it differently. FEPI, AIPI, and CEPI each hold the underlying stocks in their respective indices and then write out-of-the-money call options on each individual stock in the portfolio.

This matters because individual stock volatility is persistently higher than index-level volatility. Diversification dampens the index. By writing calls at the stock level, REX seeks to capture the full implied volatility of each position — which we believe supports rich option premiums and potential income for shareholders.

2. Three Funds, Three Themes — One Strategy

REX applies the same stock-level covered call strategy across three distinct thematic indices. Each fund gives investors exposure to a different high-growth sector while seeking to generate monthly income.

FEPI

REX FANG & Innovation Equity Premium Income ETF

Solactive FANG & Innovation Index — ~15 stocks including Apple, Amazon, Meta, Alphabet, Microsoft, Netflix, NVIDIA, and Tesla plus seven top-traded names.

Expense ratio: 0.65%

AIPI

REX AI Equity Premium Income ETF

BITA AI Leaders Select Index — ~25 stocks at the forefront of AI technologies, spanning chips, cloud, and software infrastructure.

Expense ratio: 0.65%

CEPI

REX Crypto Equity Premium Income ETF

BITA Crypto Assets & Digital Payments Index — ~25 stocks in crypto mining, trading, custody, blockchain development, and digital payments.

Expense ratio: 0.85%

Learn more: FEPI · AIPI · CEPI

3. The Volatility Gap Is the Structural Edge

Option premiums are driven by implied volatility (IV)*. The higher the IV, the richer the premium. In our view, this is where REX’s stock-level approach creates a structural advantage. Consider: a broad market index might trade at ~20% implied volatility. But individual FEPI constituents like Palantir, MicroStrategy, Coinbase, and CrowdStrike routinely carry implied volatilities between 50% and 90% or higher. The relationship between volatility and option premium is non-linear and convex — meaning that jump from 20% to 70% IV doesn’t just deliver 3.5x the premium. It may deliver significantly more.

By writing calls on individual names, REX seeks to capture this volatility gap in a way that index-level strategies cannot.

*Source: “Understanding Implied Volatility,” Cboe Global Markets, cboe.com/education

4. OTM Strikes Seek to Preserve More Upside

Because individual stock implied volatility is higher, REX can write call options further out-of-the-money (OTM) while still collecting meaningful premium. This is a key design advantage.

An at-the-money or near-the-money call caps your upside almost immediately. A further OTM strike gives the stock room to appreciate before the call kicks in. The result is a strategy designed to help balance income generation with equity participation — not one or the other.

5. Monthly Distributions, Designed for Income Seekers

FEPI, AIPI, and CEPI each seek to pay monthly distributions funded by the option premiums collected through covered call writing. The distribution amount may vary from month to month depending on market conditions and premiums received.

Distributions are not guaranteed. They may include a combination of ordinary dividends, capital gains, and return of capital. An investor should carefully consider the prospectus before investing.

6. Tax Efficiency Through Return of Capital

For 2024, approximately 90% of FEPI’s distributions were classified as Return of Capital (ROC). ROC is a common feature in covered call ETFs and can be beneficial from a tax perspective.

How it works: Return of capital is not considered income and is not immediately taxable. Instead, it reduces your cost basis. When you eventually sell shares, if held for over a year, the gains would be taxed at long-term capital gains rates (0%, 15%, or 20%) rather than ordinary income rates.

This information is not intended to be tax advice. Investors should consult with a qualified tax professional regarding their specific situation.

7. Key Risks to Understand

Covered call strategies are not risk-free, and investors should understand the tradeoffs involved.

Call Writing Strategy Risk. The covered call approach caps upside participation. In strongly rising markets, the funds will underperform the underlying stocks because gains above the call strike price are given up in exchange for premium income.

Distribution Risk. There is no guarantee that the funds will make a distribution in any given month. Distribution amounts may vary significantly.

NAV Erosion Risk. When a fund makes a distribution, its NAV typically drops by the distribution amount on the ex-dividend date. Over time, consistent distributions can reduce NAV.

Sector Concentration Risk. Each fund is concentrated in a specific sector — technology, AI, or crypto-related companies — making them more volatile than broadly diversified investments.

Derivatives and Liquidity Risk. Options contracts carry risks beyond those of the underlying securities and may be difficult to trade during volatile markets.

The Bottom Line

REX Covered Call ETFs seek to deliver monthly income by writing individual stock options on concentrated, high-volatility thematic portfolios. The stock-level approach seeks to capture more option premium than index-level strategies typically do, while OTM strikes aim to preserve more equity upside. Three tickers — FEPI, AIPI, and CEPI — give investors access to three different sectors, all with one consistent strategy.

Learn more at rexshares.com/rex-covered-call-etfs or call 1-844-802-4004.

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 go to rexshares.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

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.

Distributions for the ETFs (if any) are variable and may vary significantly from month to month and may be zero. Accordingly, the Distribution Rate and 30-Day SEC Yield will change over time, and such change may be significant. The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital, which may decrease a fund’s NAV and trading price over time.

FLEX Options Risk. The Fund may invest in FLEX Options issued and guaranteed for settlement by The Options Clearing Corporation (“OCC”). The Fund bears the risk that the OCC will be unable or unwilling to perform its obligations under the FLEX Options contracts.

The Solactive® FANG Innovation Index includes 15 highly liquid stocks focused on technology. 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.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

The post The REX Covered Call ETF Difference appeared first on REX Shares.

How FEPI Kept Pace With The Nasdaq 100, Despite High Income Generation

Tue, 03 Feb 2026 18:02:49 +0000

OTM Positioning and Total Return

Important notice: Cash distributions discussed in this document may include return of capital and should not be interpreted as investment performance or economic gain.

Executive Summary (TLDR)

REX designed its covered call ETFs to capture both income and upside by positioning call options further out-of-the-money (OTM) in higher implied volatility stocks.

Over the period analyzed, this structure delivered total returns that kept pace with a growth-oriented Nasdaq-100 ETF (ticker: QQQ) and materially outperformed two leading Nasdaq-focused equity income ETFs (ticker: JEPQ and QYLD).

Here’s what the data shows:

The performance period beginning on April 8, 2025 was selected to capture a period of elevated market volatility and broad equity dislocation, followed by a sustained equity rally. This provides a useful backdrop for evaluating how different covered call structures respond from a market trough into a subsequent equity rally.

During this period, four strategies operated within the same macro environment:

QQQ: a growth-oriented Nasdaq-100 benchmark offering full upside participation
FEPI: a concentrated, large-cap technology and innovation portfolio with single-stock covered call overlays, targeting meaningful upside with option income
JEPQ: a Nasdaq-focused equity income strategy providing partial upside through option-based yield generation
QYLD: a Nasdaq-100 covered call strategy offering high income potential but very limited upside participation

The purpose of the comparison is not to assess security selection or market timing, but to isolate how differences in portfolio construction and option implementation influence return outcomes.

To provide context for FEPI’s results, the chart and table below compare FEPI with QQQ, JEPQ, and QYLD, framing the trade-off between equity participation and income generation within a similar sector and volatility environment.

Fund	Market Price Return	NAV Return	Total Return (Assumes Reinvestment of Distributions, Which Includes Return of Capital)	Income Component**	Current 30 Day SEC Yield*	Gross Expense Ratio
REX FANG & Innovation Equity Premium Income ETF, FEPI	21.24%	20.97%	46.61%	25.64%	-0.38%	0.65%
Invesco QQQ ETF, QQQ	44.99%	44.83%	45.51%	0.68%	0.46%	0.18%
JPMorgan Nasdaq Equity Premium Income ETF, JEPQ	24.43%	24.48%	35.33%	10.85%	11.58%	0.35%
Nasdaq 100 Covered Call ETF, QYLD	15.87%	15.94%	26.87%	10.93%	0.07%	0.60%

**Income Component represents the difference between Total Return (assumes reinvestment of distributions, which includes return of capital) and NAV Return over the measurement period.

*The 30-Day SEC Yield represents net investment income, which excludes option income, earned by such ETF over the 30-Day period, expressed as an annual percentage rate based on such ETF’s share price at the end of the 30-Day period.

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.

The OTM-ness Principle

When a covered call is sold, future upside beyond the strike price is exchanged for immediate premium income. The relationship between strike distance and premium collected is not linear and is heavily influenced by implied volatility.

At lower levels of implied volatility, moving a call further OTM typically results in a disproportionate reduction in premium. At higher levels of implied volatility, that trade-off becomes less severe. In practical terms, this means that at higher implied volatility levels, a strategy may be able to position strikes further from spot prices while still collecting meaningful income.

Lower volatility (~25% implied volatility): Moving from a 1% OTM to a 5% OTM strike reduced estimated monthly premium from approximately 2.5% to 1.2% (~50% decline)
Higher volatility (~50% implied volatility): The same shift in strike distance reduced estimated monthly premium from approximately 5.4% to 3.9% (~25% decline)

These examples highlight how elevated implied volatility can support wider strike distances with less proportional sacrifice to premium, helping income generation and equity participation coexist more effectively.

FEPI: Application of OTM Positioning at the Security Level

FEPI implements its covered call strategy at the individual stock level across a concentrated portfolio of large-cap technology and innovation companies.

This volatility profile supports:

Greater flexibility in strike distance selection
The ability to position calls further OTM (typically 5% to 7%) while still generating meaningful premium
A return profile that reflects both option income and retained equity participation

Structural Comparisons

FEPI vs. QQQ: Growth Benchmark Perspective

QQQ is designed to provide full exposure to the price performance of large-cap Nasdaq-listed growth companies. Its return profile is therefore dominated by market price appreciation, with distributions playing a minimal role in total return outcomes.

FEPI, by contrast, introduces a second return component through option income. While this structure can reduce participation beyond the selected strike levels, the use of further OTM positioning at the individual stock level is intended to retain participation in strong equity rallies.

The distinction between the two strategies is structural:

QQQ maximizes exposure to price appreciation
FEPI balances price participation with income generation

The results show that similar total return outcomes can be achieved with different mixes of income and upside participation, shaped by strike selection. During the period analyzed, FEPI exceeded QQQ’s total return by 1.10%.

FEPI vs. JEPQ: Volatility Source and Option Structure

While both FEPI and JEPQ are positioned as equity income strategies with significant exposure to large-cap growth and technology-oriented companies, their option implementations differ materially.

JEPQ generates income primarily through equity-linked option exposure via equity-linked notes tied to the Nasdaq. Index-level implied volatility is structurally lower and more stable than single-stock volatility, which generally limits how far strikes can be moved OTM without a meaningful reduction in premium collected.

These structural differences lead to distinct return profiles:

FEPI emphasizes flexibility in upside participation alongside income generation through wider OTM positioning at the individual stock level
JEPQ emphasizes income stability and volatility dampening through index-linked option exposure

This highlights how differences in option structure and volatility source can shape income and upside participation. During the period analyzed, this structural difference contributed to FEPI outperforming JEPQ by +11.28%.

FEPI vs. QYLD: Upside Capture, Strike Selection, and Volatility

Although FEPI and QYLD both seek to deliver equity income from tech-oriented, large-cap growth exposure, they pursue that goal through notably different option structures.

QYLD seeks to track a Nasdaq-100 buy-write benchmark by owning the Nasdaq-100 and systematically selling one-month, at-the-money index calls. This approach is designed to maximize premium and steady cash flow, but it begins capping gains almost immediately as the index advances, which structurally suppresses upside in strong or persistent rallies.

FEPI, by contrast, applies its option overlay at the individual stock level with OTM strikes, allowing more room for equity appreciation before upside is called away.

As a result, the two strategies exhibit distinct return profiles:

FEPI is designed to balance option income with more meaningful upside participation by using slightly out-of-the-money calls on concentrated, higher-volatility tech names.
QYLD is designed primarily for steady, recurring distributions by selling at-the-money calls on the Nasdaq-100, accepting that total return will be heavily constrained in strong bull phases.

Over the period examined, this combination of deeper upside “runway” (via out-of-the-money single-stock calls) and exposure to a concentrated tech basket was a key contributor to FEPI’s ability to participate more in market strength and ultimately outperform QYLD.

How OTM-ness Contributed to FEPI’s Upside (+21.24% Price Appreciation)

Stock-level exposure to high-growth leaders (NVDA, PLTR, TSLA, NFLX, META, among others), where implied volatility and option premiums are structurally higher.
Wider strike positioning, with calls typically written 5%–7% OTM rather than the 1%–3% common in index-based strategies.
Upside participation retained, allowing equity rallies to contribute meaningfully to total return while still generating income.

View the full fund’s holdings here: https://www.rexshares.com/fepi/

Looking Ahead

Post-2020 market conditions reflect a structurally higher volatility regime than the prior decade, supporting wider OTM positioning without a proportional reduction in income. FEPI’s 46.61% total return (market price plus reinvested distributions) over the period analyzed illustrates how OTM positioning can support both income and equity participation in an elevated volatility environment.

Volatility is likely to remain structurally higher amid ongoing geopolitical and policy uncertainty.
Wider strike positioning becomes more efficient as implied volatility rises, reducing the trade-off between premium and upside.
Stock-level strategies can capture dispersion in volatility and returns that index-based approaches smooth away.
Income and growth need not be mutually exclusive when strike selection is aligned with volatility conditions.

The Bottom Line

The relationship between implied volatility and premium capture is asymmetric.

Writing calls 5%–7% OTM rather than 1%–3% reduces immediate relative premium, but preserves more upside when markets rally and seeks to preserve downside cushioning through option income.

In 2025’s market rally, this structure translated into strong total return alongside meaningful income generation. For investors seeking exposure to high-growth equities without abandoning cash flow, FEPI’s performance during this period illustrates a different path to total return.

Performance data: April 8, 2025 – December 31, 2025. Past performance is not indicative of future results. All investments carry risk, including possible loss of principal. Distributions are not guaranteed. Please see fund prospectus for complete details and risk disclosures.

To provide context on FEPI’s income-oriented approach, the comparison below includes QYLD and JEPQ as a widely followed equity income ETF and QQQ as a broad U.S. equity market benchmark. The goal is to highlight structural differences in objectives, portfolio management, and risk exposures that can lead to different return profiles.

Fund	FEPI	JEPQ	QQQ	QYLD
Objective	Capital appreciation and current income.	The Fund seeks current income while maintaining prospects for capital appreciation.	The Invesco QQQ Trust SM, Series 1 (the “Fund” or “Trust”) seeks to track the investment results, before fees and expenses, of the Nasdaq-100 Index® (the “Underlying Index”).	The Global X NASDAQ 100® Covered Call ETF (the “Fund”) seeks to provide investment results that closely correspond, before fees and expenses, generally to the price and yield performance of the Cboe NASDAQ-100® BuyWrite V2 Index (the “Underlying Index”).
Strategy Summary	The Fund uses a covered call strategy to provide income and exposure to the share price returns of the companies comprising the Index.	The investment objective of the Fund is to seek current income while maintaining prospects for capital appreciation. The Fund seeks to achieve this objective by (1) creating an actively managed portfolio of equity securities comprised significantly of those included in the Fund’s primary benchmark, the Nasdaq-100 Index® (the Benchmark), and (2) through equity-linked notes (ELNs), selling call options with exposure to the Benchmark. The resulting Fund is designed to provide investors with performance that captures a majority of the returns associated with the Benchmark, while exposing investors to lower volatility than the Benchmark and also providing incremental income.	The Trust seeks to achieve its investment objective by holding a portfolio of the common stocks that are included in the Index (the “Portfolio”), with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the Index.	The Global X Nasdaq 100 Covered Call ETF (QYLD) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cboe Nasdaq-100 BuyWrite V2 Index.
Management Style	Active	Active	Passive	Active
Benchmark	Solactive FANG Innovation Index	Nasdaq-100 Index®	Nasdaq-100 Index®	Cboe NASDAQ-100® BuyWrite V2 Index
Inception Date	10/11/2023	5/3/2022	3/10/1999	12/11/13
AUM	$603.53m	$33.94bn	$408.54bn	$8.36B
Prospectus	Link	Link	Link	Link
Standardized Performance	Link	Link	Link	Link

Disclosures

Investing in the Fund 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 Fund.

THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.

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.

Nasdaq-100. The Nasdaq-100 is a stock market index designed to measure the performance of 100 of the largest non-financial companies listed on the Nasdaq Stock Market, selected and weighted by market capitalization across sectors such as technology, telecommunications, retail, and biotechnology.

The CBOE Nasdaq-100 BuyWrite Index. Measures the total rate of return of a Nasdaq-100 covered call strategy that holds a portfolio linked to the Nasdaq-100 Index and sells a succession of one-month, at-the-money Nasdaq-100 call options.

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, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Index: 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.

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.

Market Price: The current price at which shares are bought and sold. Market returns are based upon the last trade price.

30-Day SEC Yield: The 30-Day SEC Yield represents net investment income, which excludes option income, earned by such ETF over the 30-Day period, expressed as an annual percentage rate based on such ETF’s share price at the end of the 30-Day period.

Implied Volatility: A measure of the market’s expectation of future price fluctuations for a security, derived from the current market price of an option on that security. Higher implied volatility generally reflects greater expected price movement and typically results in higher option premiums.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

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Why Implied Volatility Matters for Your Options Income Strategy

Tue, 02 Dec 2025 13:15:31 +0000

Options Education

What Is Implied Volatility?

Implied volatility, usually shortened to IV, is the market’s expectation of how much a stock will move over a given period, expressed as an annualized percentage. It is derived from current option prices rather than from past price history. An implied volatility of 30% means the options market is pricing in a roughly 30% annualized range of movement in the underlying stock.

This page covers how IV is calculated, how it moves option premiums, how to read the IV column in an option chain, what IV percentile and IV rank measure, and why implied volatility falls after earnings.

Start Here

The Basics IV and Pricing Option Chain IV Rank What Moves IV Income Strategies FAQ

The Basics

Where the number comes from

An option pricing model takes several inputs and returns a price. The stock price, the strike price, the time left to expiration, and interest rates are all observable. Volatility is not. It is the one input nobody can look up.

So the market solves the problem backward. Take the price an option is actually trading at, hold every other input fixed, and work out what volatility figure the model would need in order to produce that price. That figure is the implied volatility. It is not a forecast anyone published. It is what the collective pricing of options implies about expected movement.

Implied versus historical volatility

Historical volatility measures how much a stock actually moved over some past window, calculated from realized price data. Implied volatility is forward looking and comes from what buyers and sellers are paying for options right now. Historical volatility describes what happened. Implied volatility describes what the market expects. The two frequently disagree, and the gap between them is itself watched closely by options traders.

What high and low IV actually describe

Implied volatility is a statement about the size of expected movement, not its direction. High IV does not mean the market expects a stock to fall. It means the market expects a wide range of outcomes in either direction.

There is no universal threshold for high. A broad diversified index might typically sit near 15% to 20%. A large technology stock might run 30% to 40%. A high growth single stock can trade above 60% as a matter of routine. A 40% reading is elevated for one name and calm for another, which is why traders judge IV against a stock’s own history rather than against an absolute number.

IV and Pricing

How implied volatility affects option pricing

Higher implied volatility raises option premiums. Lower implied volatility reduces them. Everything else held constant, this is the single most direct relationship in options pricing.

The reason is straightforward. An option only pays off if the stock finishes past the strike. A wider expected range of movement makes that outcome more likely, so a buyer will pay more for the contract and a seller will demand more to write it.

For an at the money option, the relationship is close to proportional. Roughly speaking, doubling implied volatility roughly doubles the premium. That approximation breaks down as strikes move further from the current price, but it is a useful mental model for the contracts that trade most.

Hypothetical Illustration

A stock trading at $100. One 30 day at the money call. Only the implied volatility changes.

Implied Volatility	Premium	% of Position
25%	$2.90	2.9%
55%	$6.30	6.3%

Calculated using the standard at the money approximation, premium is roughly 0.4 times price times implied volatility times the square root of time in years. Hypothetical and for illustration only. Not based on any actual security and not a projection of any result. Figures do not reflect commissions, fees, or taxes, and a single period premium should not be annualized.

Option Chain

What IV means in an option chain

The IV column in an option chain shows the implied volatility of each individual contract, calculated from that contract’s own market price. It is not one number for the whole stock. Every strike carries its own reading, and those readings are rarely equal.

Strike	Moneyness	Premium	IV
$95	In the money	$6.85	29.5%
$100	At the money	$2.90	25.0%
$105	Out of the money	$1.05	26.8%
$110	Out of the money	$0.35	29.2%

Hypothetical option chain for a stock trading at $100 with 30 days to expiration. For illustration only. Not based on any actual security.

What ATM IV means

ATM IV is the implied volatility of the at the money contract, the strike sitting closest to the current stock price. It is the figure most often quoted as a single headline reading for a stock, because at the money contracts are usually the most heavily traded and the most sensitive to changes in volatility. In the table above, ATM IV is 25.0%.

Why the IV column is not flat

Notice that IV dips at the money and rises as strikes move in either direction. That curve is called the volatility smile, or skew when it tilts to one side. It exists because real stock returns produce more extreme moves than a simple model assumes, and the market prices the outer strikes accordingly. A single stock IV figure quoted without a strike is almost always the at the money reading.

IV Rank

IV percentile and IV rank

A raw implied volatility figure cannot tell you whether volatility is high, because normal differs by stock. Two measures solve that by comparing current IV to the same stock’s own history, usually over the trailing year.

IV percentile is the share of days in the lookback period on which implied volatility was lower than it is today. An IV percentile of 80 means IV has been below its current level on 80% of trading days that year.

IV rank instead places current IV on the range between the period’s low and high. An IV rank of 80 means IV sits 80% of the way from the year’s lowest reading to its highest.

The two often disagree. IV rank is pulled around by a single extreme day, since one spike resets the top of the range for a year. IV percentile is less sensitive to outliers because it counts days rather than measuring distance. Neither predicts direction, and neither is a signal on its own.

What Moves IV

Implied volatility moves with expectation, not with price

IV rises when the market becomes less certain about what happens next, and falls when that uncertainty resolves. A stock can rise sharply while its implied volatility drops, and the reverse happens just as often.

IV Crush

The most reliable pattern in implied volatility is the fall that comes after an event, not the rise before it.

Implied volatility climbs in the days ahead of a scheduled event such as an earnings release, because the range of possible outcomes is wide and the date is known. Once results are out, the uncertainty is gone and IV typically drops sharply. That drop is called IV crush.

Because premiums move with implied volatility, an option bought before earnings can lose value afterward even when the stock moves in the direction the buyer expected. The move was already priced in. The collapse in IV was not offset by it.

Earnings

A scheduled date with an unknown outcome. The clearest driver of single stock IV.

Rates and macro data

Central bank decisions and inflation prints lift volatility across the market, which feeds into individual names.

Company and sector news

Product launches, litigation, regulatory decisions, and merger activity all widen the range of expected outcomes.

Concentration

A single stock carries the full force of its own news. An index dampens the same events, because its constituents are imperfectly correlated.

Both Sides

What IV means to a buyer and to a seller

An option contract gives the buyer the right, but not the obligation, to buy or sell a stock at a set strike price before expiration, in exchange for a premium paid up front. The seller collects that premium and takes on the obligation to fulfill the contract if the buyer exercises.

Implied volatility sits on both sides of that exchange, and it works in opposite directions.

For a buyer, higher IV means paying more for the same contract. The maximum loss is still the premium paid, and that premium is now larger. A buyer entering during elevated IV needs a bigger move to break even, and is exposed to losing value if implied volatility falls before expiration.

For a seller, higher IV means collecting a larger premium. That premium is received regardless of what happens next. But higher IV also reflects a genuinely wider range of possible outcomes, which means a greater chance the contract finishes in the money and the obligation comes due. The larger premium is compensation for real additional risk, not a free improvement in terms.

Income Strategies

Why implied volatility matters to an options income strategy

A covered call strategy holds stock and sells call options against it. The premiums collected are the source of the income the strategy seeks to distribute. Since premiums scale with implied volatility, IV is the input that most directly moves that income.

This explains something investors in covered call funds notice and often find puzzling: distribution amounts move around considerably from period to period even when the underlying holdings have not changed. When implied volatility contracts, there is simply less premium available to collect.

It also explains why volatility levels differ so much between strategies. A fund writing calls on a diversified index is working with index level implied volatility, which is dampened because its constituents do not move together. A fund writing calls on individual holdings is working with single name implied volatility, which is typically higher. That difference in available premium is the reason the two approaches produce different distribution profiles.

The tradeoff runs in both directions and deserves stating plainly. Higher implied volatility means larger premiums, and it also means the underlying stock genuinely is more likely to make large moves, including downward ones. A covered call strategy caps upside above the strike while retaining full downside exposure to the shares it holds. Larger premium income is compensation for accepting that profile, not a way around it. Distributions are not guaranteed, and these strategies are not suitable for all investors.

See how REX covered call ETFs write at the individual stock level

Common Questions

Implied volatility questions, answered

What is implied volatility?

What is implied volatility in options?

In options, implied volatility is the volatility figure that, when entered into an option pricing model, produces the option’s current market price. Every other input to the model is observable: the stock price, the strike price, time to expiration, and interest rates. Implied volatility is the one unknown, so it is solved for backward from the price the option is actually trading at.

How does implied volatility affect option pricing?

Higher implied volatility raises option premiums and lower implied volatility reduces them, holding everything else constant. A higher expected range of movement makes it more likely an option finishes in the money, so buyers pay more for it. For an at the money option, premium moves roughly in proportion to implied volatility: doubling IV roughly doubles the premium.

What does IV mean in an option chain?

The IV column in an option chain shows the implied volatility of each individual contract, calculated from that contract’s current market price. IV usually differs from strike to strike rather than staying constant. At the money contracts typically show the lowest IV, with figures rising as strikes move further in or out of the money. That pattern is called the volatility smile or skew.

What does ATM IV mean?

ATM IV is the implied volatility of the at the money option, meaning the contract whose strike price is closest to the current stock price. It is commonly used as the single headline reading for a stock’s implied volatility because at the money contracts are usually the most actively traded and the most sensitive to changes in volatility.

What is IV percentile?

IV percentile measures where current implied volatility sits relative to its own history, usually over the trailing year. An IV percentile of 80 means implied volatility has been lower than its current level on 80% of days in that period. It answers whether IV is high or low for this particular stock, which a raw IV figure cannot, because a 40% reading is calm for one stock and elevated for another.

What is considered high implied volatility?

There is no fixed threshold, because normal implied volatility differs by stock. A large diversified index might sit near 15% to 20%, a mega cap technology stock near 30% to 40%, and a high growth single stock above 60%. High is best assessed relative to that stock’s own history using IV percentile or IV rank rather than against an absolute number.

What is the difference between implied volatility and historical volatility?

Historical volatility measures how much a stock actually moved over a past period and is calculated from realized price data. Implied volatility is forward looking and is derived from what buyers and sellers are currently paying for options. Historical volatility describes what happened; implied volatility describes what the market expects.

What is IV crush?

IV crush is the sharp fall in implied volatility that typically follows a scheduled event such as an earnings release. Implied volatility usually rises ahead of the event as uncertainty builds, then drops once the outcome is known. Because premiums move with implied volatility, an option can lose value after the event even when the stock moves in the direction the buyer expected.

More on how options work, from the ground up.

Visit Options Education

Important Information

This material is for educational purposes only. It is not investment advice, not a recommendation to buy or sell any security, and not an offer of any product or strategy. Options involve risk and are not suitable for all investors.

All premium figures, implied volatility levels, and option chain data shown on this page are hypothetical and are provided solely to illustrate the relationships described. They are calculated using a standard at the money approximation, are not based on any actual security, do not reflect commissions, fees, bid ask spreads, or taxes, and are not a projection of any result. A premium collected over a single period should not be annualized. Past performance is not indicative of future results.

Covered call strategies limit potential gains above the strike price of the options written while retaining the full downside risk of the underlying holdings. Distributions from any fund employing an option writing strategy are not guaranteed, may vary substantially from period to period, and may include return of capital, which reduces net asset value and an investor’s cost basis. Past distributions are not indicative of future distributions.

Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about REX ETFs, please visit rexshares.com or call 1-844-802-4004. Read the prospectus carefully before investing.

Standardized options disclosure: before engaging in options transactions, investors should read Characteristics and Risks of Standardized Options, published by The Options Clearing Corporation.

Distributed by Foreside Fund Services, LLC. Last reviewed August 2026.

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