Tax-Loss Harvesting? Get More From Current Income in Daily Covered Call ETFs

Core Insights - As 2025 approaches, investors are considering tax-loss harvesting opportunities to reduce tax liabilities by selling investments at a loss [1][2] - Covered call ETFs present unique opportunities for tax-loss harvesting, even when they are performing positively [2] Tax-Loss Harvesting Mechanism - Tax-loss harvesting involves selling investments at a loss to offset capital gains taxes from profitable investments [1] - The end of the year is a common time for investors to evaluate tax-loss harvesting strategies [1] Covered Call ETFs - Covered call ETFs can generate taxable distributions that may exceed total returns, leading to potential negative price returns and tax-loss harvesting opportunities [2] - Traditional covered call strategies, which utilize monthly options, may limit total returns during market rallies, as gains are capped once the underlying stocks exceed the strike price [2] - Daily options strategies in covered call ETFs can enhance income while targeting equity market returns, improving the balance between income and total returns [2] Investment Opportunities - Investors can avoid the "wash sale" rule while engaging in tax-loss harvesting, allowing for a transition to ETFs like the ProShares S&P 500 High Income ETF (ISPY) [2] - The ProShares S&P 500 High Income ETF charges a 55 basis point fee and has achieved a 13.5% year-to-date return, outperforming its category average [2] - The ETF also offers a 9.8% distribution rate over the past 12 months, indicating strong income potential for investors [2]