The Volatility Gap That Funds FEPI’s Weekly Distributions
Stock-level implied volatility runs structurally higher than index volatility. FEPI is built to capture that spread — systematically, week over week.
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.
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.
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.
Average Monthly Premium vs. Distribution
Source: REX Shares, as of 05/22/2026. Distributions are not guaranteed.
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.
What ROC Is
The Allocation Advantage
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
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
