Looking For Hands-Off Profits? Discover How Option-Based ETFs Can Work For You

If you've been investing or trading for a while, you've probably heard of or dabbled with option trading. Many traders are drawn to option trading because of the ability to make more money quickly compared to traditional stock trading.

But, options are inherently more risky than buying common stock, and most retail investors lose money over time trading option contracts. But, there are other ways to make money through options rather than buying and trading them yourself.

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In today's market, there are a number of ETFs and funds that use option tactics to drive returns to investors. Jay Pestrichelli, the founder and managing director of ZEGA Financial, a firm that designs ETFs that employ options strategies to deliver returns to investors.

ZEGA has even designed, built and manages an ETF for SoFi Technologies called the SoFi Enhanced Yield ETF THTA. Pestrichelli joined Benzinga co-founder Jason Raznick on “The Raz Report” podcast to discuss $THTA and ZEGA's mission of using option strategies to both enhance returns, and balance risk for investors looking for a hands-off approach to their portfolios.

"What it means is you can get direct exposure to an index, a theme, even active management," Pestrichelli said on the podcast. "We even put options in ETFs. You get a lot more diversification, there are also some tax benefits when it comes to ETFs." 

Pestrichelli described the $THTA ETF and its strategy: selling out-of-the-money options to deliver consistent returns, even during market downturns.

SoFi says, "THTA provides a simple, liquid way to diversify one’s portfolio by introducing what is a fast-growing emerging asset class: options-powered income strategies."

"The new fund will also take advantage of tax loss harvesting opportunities in addition to utilizing ZEGA options strategy," the company adds.

ZEGA also manages an ETF called the Zega Buy And Hedge ETF ZHDG which provides investors with exposure to the U.S. large-cap market while mitigating downside risks in the event of a market downturn, such as the COVID-19 market crash.

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Photo: Benzinga/Zega Financial