Have You Figured It Out Yet?

The other day I mentioned a filing for putwrite ETFs from Tuttle Capital as follows.

When I wrote that post, I looked at some old posts for something related and stumbled into one about CBOE Validus S&P 500 Dynamic Put Write Index ETF from August, 2023. I haven't written about it since so this seems like a good time to take a fresh look. 

Similar to the WisdomTree Putwrite Strategy Fund (PUTW), PUTD sells close to the money puts and looking at the holdings today, there are seven strikes prices all pretty close to the money and all expiring on December 20th. The dividend history has been uneven. Since listing, Yahoo shows three dividends, one at the end of last year, one in July of this year and one in October of this year. Yahoo has it yielding 3.43% versus 11.55% for PUTW.

Here's the performance versus PUTW and client/personal holding PPFIX.

Although not on the screen shot, PUTD and PUTW both have a correlation of 0.95 to the S&P 500 versus -0.19 for PPFIX. The price return difference between PUTD and PUTW is pretty wide due to the difference in yield but on a total return basis they both seem to be trying to do the same thing. Equity-like returns even if they don't quite keep up with stocks, and less volatility which they deliver on. 

From PUTW's inception in late 2015 to end of of 2019, so long before interest rates went up, PUTW had a much lower upcapture. Interest rates go into the math of determining option premiums, so this is a relevant point. 

I threw in PPFIX because where PUTD and PUTW are probably trying to achieve the same thing, PPFIX is trying to achieve something else which is a bond like return with very little volatility. It does not sell puts that are close to the money, it sells far out of the money, If you wanted a return stream that was correlated to equities with less volatility, you wouldn't go with PPFIX, that would be the wrong expectation. This exercise is a good example of looking to see what a fund is trying to do. Someone expecting equity upcapture from PPFIX would be pretty bummed. 

PUTW offered some protection in 2022 dropping only 10% versus the S&P 500 falling 18% but as a horizontal line that tilts upward, PPFIX was up 1.84% that year. Different objectives, different outcomes. 

Selling volatility, that's what these funds are doing, is tricky as I always say. The 2018 Volmageddon is the best example of how bad it can be when things go wrong. My interest far exceeds the allocation I have for client or personal accounts but it is one of those things that is worth studying.

And a follow up to last night's post about seniors who don't want to ever stop working. I circled back to read the comments, always read the comments, and found one that really resonated.

Advisors not wanting to retire is common. I wouldn't say that the majority of advisors feel this way but plenty are in the camp of not wanting to retire. The way I've described this is that while I don't see myself wanting to retire, at some older age like 75, maybe older, maybe younger, people may not want to hire me as their advisor but as was the case 20 years ago when I started blogging and is the case now, I don't know why I would choose to give up the work. 

If you enjoy what you do and you set your own schedule, how different would retirement be? Obviously, this is not a physical endeavor. If firefighting had been my career instead of my volunteer gig that might a different story due to injury or wearing out but even then there are ways to remain attached to a much older age. 

This path for me is less about planning than pursuing interests where they took me. In a more traditional career path at a company, there probably needs to be more planning. Someone who's an engineer at some sort of company may love the work so the planning might be to figure out how to stay engaged with the parts they enjoy. Or if someone gets to 55 and wants to find something new, whether that is a new paid career or just some sort of endeavor in search of a purposeful "retirement," then that too might require planning. Either way, waking up on the first day of retirement and saying to yourself, "ok, now what am I going to do?" is a bad spot to be in.

It's been a while since I've quoted our friend Bill here in Walker who said "you can figure it out now or you can figure it out later but if you can figure it out now, you'll be much happier." Where are you in life? Have you figured it out? The 93 year old RIA figured it out, maybe the rest of us can too. 

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.