Retirees Are Snapping Up These 3 High-Dividend ProShares ETFs Aggressively

“Bulls Make Money. Bears Make Money. Pigs Get Slaughtered.”

This popular Wall Street maxim reflects the mindset of traders: while markets will trend towards hills and valleys, traders can make money in either direction – but holding onto a position for too long will erase one’s gain. While the vast majority of investors look for markets to go up, ProFunds Group’ founders, Michael Sapir and Louis Mayberg created the first bear market inverse mutual fund in the 1990s, going on to create the ProShares collection of ETFs in 2006. Approaching the market from a different angle would become a ProShares hallmark. 

ProShares currently offers Exchange Traded Funds in the three (3) equity index categories as well as cryptocurrency, commodity, fixed-income, currency, and eight (8) categories of geared ETFs, which include leveraged and inverse types for a cumulative total of 104 ETF selections. 

ProShares High Income ETFs have become popular of late among retirees. The Bethesda, MD based company announced that its trio of High Income ETFs collectively broke the $1 billion AUM mark in June. When compared to its rivals’ covered call ETF offerings for the same underlying indexes, ProShares’s ETFs have been generally outperforming the pack. The primary strategic difference is ProShare’s use of daily options, as opposed to monthly ones. The daily options are sold under swap agreements, so ProShares’ ETFs don’t trade the options, per se. 

ProShares S&P 500 High Income ETF

The S&P 500 Index is one of the most popular stock index benchmarks in history – even Warren Buffett owns its ETFs in a private family portfolio.

The S&P 500 Index has been a benchmark for wealth building for many years, and has been lauded by countless economists, investors, and advisors, most notably, Warren Buffett. Investors seeking S&P 500 sympathetic upside with double digit yields, can have their cake and eat it too with ProShares S&P 500 High Income ETF (NASDAQ: ISPY).  Intended to track the S&P 500 Index, ISPY combines a sizable percentage of comparable market fluctuations of the Index along with generating monthly dividend payouts with a 13.23% APY. This is the result of the daily call option sales managed by ProFunds and paid for by the expense ratio. 

Although it only commenced in December 2023, Based on market price at the time of this writing, ISPY statistics are as follows:

Based on Wall Street analysts’ coverage of the stocks in ISPY, 423 have “buy” ratings, with a consensus 12-month target price of $55.60. 

ProShares Nasdaq-100 High Income ETF

The NASDAQ-100 focuses on high flying NASDAQ listed tech stocks without the performance drag of NYSE financial and other industry stocks of the S&P 500.

As the majority of tech stocks trade on the NASDAQ exchange, the Nasdaq-100 Index is somewhat more aggressive in its bullish runs, since it is not held back by financial stocks and other NYSE-listed stocks in other industries that could hold it back. Of course, the extra volatility means the downsides can be equally volatile. 

ProShares Nasdaq-100 High Income ETF (NASDAQ: IQQQ) is the ProShares entry in this arena that is competing with the more established JP Morgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) and the Global X Nasdaq 100 Covered Call ETF (NASDAQ: QYLD). 

Although all three employ a covered call option strategy with monthly dividend payouts, there are some differences:

• QYLD is passively managed and uses a 100% covered call strategy.
• JEPQ is actively managed but only uses a partially covered call strategy, so the unhedged portion delivers more aggressive upside when the Nasdaq-100 is in a bullish trend.
• IQQQ incorporates a daily covered call option referred to as a “zero days to expiry” strategy, so those options zero out at the close of market hours on the same days as issuance. 

Based on market quotes at the time of this writing, IQQQ details are as follows:

Based on Wall Street analysts’ coverage of the stocks in IQQQ, 86 of them carry “buy” ratings, with a consensus 12-month target price of $53.80. 

ProShares Russell 2000 High Income ETF

The small cap stocks of the Russell 2000 contain inherently more volatile stocks than the mid and large cap stocks of the NASDAQ 100 or the S&P 500.

Launched in September, 2024, ProShares Russell 2000 High Income ETF (CBOE: ITWO) is the latest addition to the ProShares High Income covered call ETF catalog. In its press release announcement, the company described its covered call strategy thus: “While traditional covered calls allow investors to hold long positions for a month on the securities they’re selling options for, with daily options, investors can sell every day and take advantage of the underlying stocks’ rising prices over the month. If they were holding an option on a longer holding, the rising price of the underlying security means they’d be exposed, having to sell to the option holders at the lower price.” 

Due to the fact that the Russell 2000 Index tracks small-cap companies, it has a much higher volatility level than either the Nasdaq 100 or the S&P 500 indices. ITWO’s trajectory displays 

this explicitly: within two and a half months of its debut, it was up over 12%. After the initial reciprocal tariff policy announcements, ITWO was down -15%, only to come back into the black at the time of this writing. With that kind of volatility, it’s no surprise that the daily covered call premiums have been lucrative, making ITWO the highest yielding ETF of the ProShares trio, despite being the youngest. Based on market prices at the time of this writing, ITWO’s details include:

Based on Wall Street analysts’ coverage of the stocks in ITWO, 1,319 have “buy” ratings, with a consensus 12-month target price of $52.70.

While ProShares has been at the forefront of inverted ETFs, cryptocurrency ETFs, and other, more exotic financial areas, it is making inroads on broader, more plain vanilla territory with an innovative approach. With daily covered calls for yield sans the monthlong duration to suppress upside, the ProShares approach is winning over  a growing share of the income-maven retiree market.