The high-yield ETF market has evolved through distinct phases. Early on, issuers chased eye-popping annualized yields, sparking massive excitement among retail investors. YouTube feeds overflowed with hype around funds targeting 90-100% yields on names like MicroStrategy and Tesla via covered calls. It felt like a gold rush—the casino for income ETFs had opened its doors, and times were good... for a while.

But the "high" didn't last. What followed was a graveyard of eroding NAVs and painful reverse splits. Retail investors learned a brutal, expensive lesson: 90% of nothing is still nothing. A massive distribution doesn't matter if your principal vanishes.

Enter TappAlpha, the perfect subject for our inaugural issue of Yield Architects. In this series, we profile one ETF issuer per episode, diving deep into their strategy and product lineup to help you understand how they generate income—and whether their funds belong in your portfolio.

While others battled in the yield wars, TappAlpha entered quietly with a different thesis: What if we prioritized NAV stability alongside attractive income?

Today, we analyze how their flagship funds (TSPY, TDAQ) have performed, why they launched the leveraged versions (TSYX, TDAX), and where they fit in a balanced portfolio. I caught up with Si Katara, Founder & CEO of TappAlpha, to ask the questions that actually matter to your bottom line.

QUESTION 1: The 0DTE Advantage
Many income investors are familiar with monthly covered call funds (like JEPQ or XYLD). Can you explain in simple terms why TappAlpha focuses on daily 0DTE (Zero Days to Expiration) options?

ANSWER (Si Katara):
Most income ETFs sell options with 30–45 days to expiration. That approach works, but it bundles a lot of market risk, volatility, and time decay into a single decision.

Our approach breaks that exposure into daily increments.

By selling options that expire the same day (0DTE), we’re harvesting the steepest part of the time decay curve which occurs just before expiration. This also gives us more frequent opportunities to adjust positioning, respond to market conditions, and reset exposure each morning rather than committing capital for a full month. And one of the most impactful factors is, we’re true 0DTE, meaning our options are typically in place for only the 6.5 hours of the trading day, which means our long position is uncapped overnight and on weekends.

That’s when some of the largest events take place like earnings announcements and macro economic reports.

In simple terms: instead of making one big bet and waiting, we make many small, disciplined ones — with tighter feedback loops.

QUESTION 2: Capturing Upside
A common complaint with high-yield ETFs is that they "cap" the upside during bull markets. How does your daily strategy aim to solve the "capped upside" problem?

ANSWER (Si Katara):
The “capped upside” critique is valid for many traditional covered call strategies.

A daily approach helps mitigate that in two ways:

First, because options expire each day, the portfolio isn’t perpetually locked into a single strike during extended rallies. Upside resets daily rather than being capped for weeks.

Second, strike selection is dynamic. We’re not mechanically selling the same distance out of the money regardless of conditions. Market context matters — volatility, momentum, and positioning all influence how aggressive or conservative the call sale is on a given day.

Third, because TappAlpha funds are true 0DTE, upside is uncapped outside of market hours. There is no call obligation overnight or over weekends in most cases.

The goal isn’t to eliminate tradeoffs — it’s to manage them intentionally and minimize long-term opportunity cost.

EDITOR’S NOTE: This is the "secret sauce" for the modern income investor. By utilizing 0DTE to capture overnight moves, TappAlpha attempts to solve the biggest flaw in the income space: missing the rally. It provides the perfect chance to analyze these funds head-to-head using the tools on RetailInvestorReport.com.

Start with The Master Distribution List to compare yields across the board. Income investors' first instinct is always to check the yield, so let's see how TappAlpha stacks up against other index funds—especially fellow 0DTE players.

What stands out? While many 0DTE funds deliver impressive headline yields, TSPY often shows more consistency and balance. But yield alone isn't enough—a simple distribution announcement doesn't tell the full story.

To go deeper, head to The High Yield Terminal for performance charts over time.

That blue line on TSPY? That’s Price Appreciation not NAV erosion. Music to any retail investor's ears. Compared side-by-side with other 0DTE funds, TSPY emerges as a clear winner for safer, more sustainable income investing.

Now lets look at TDAQ. This is the same strategy applied to the QQQ. The screenshot below tells you in an instant.

The chart illustrates that TDAQ generated a 13.38% annualized dividend while its share price remained stable. This resulted in a total return over 6% beating QQQ’s 4.9% in the same period. This is without reinvesting the dividends. The visual data confirms the dividend didn’t come at the expense of the firms Net Asset Value (NAV). This reporter wonders if the headline of this article should be: TDAQ is BEATING THE UNDERLYING. Income investing if often thought of as having to sacrifice growth or total return for income but in this case you can have both.

There's still a place for those ultra-high-yield thrill rides—we all enjoy a dip in the champagne tub now and then—but as a core portfolio staples, TSPY & TDAQ stand above the competition.

That was my take. Now let's hear from Si.

QUESTION 3: Outperformance Secrets
As shown in the attached screenshot from my ETF comparison app, TappAlpha's funds outperformed all other 0DTE S&P 500 products in 2025, often by significant margins in total returns and yield consistency. How has TappAlpha achieved this edge over the competition? Is it due to the pure trading skill of your portfolio managers, proprietary software or algorithms, specific rules behind the fund or something else?

ANSWER (Si Katara):
There isn’t a single secret — and we’re intentionally skeptical of anything that depends on one. The edge comes from structure, discipline, and tooling, not hero trades.

A few things that matter:
We treat income generation as a repeatable process, not a yield chase
Risk is sized daily, not monthly

We built our own internal systems to manage execution, exposure, and consistency across thousands of trades

The team combines deep options experience with a systems-engineering mindset. The focus is less on prediction and more on designing a framework that holds up across different market regimes.

The New "Lift" Series (TDAX & TSYX)

QUESTION 4: Leverage for Income
You recently launched TDAX and TSYX (Jan 2026) with "30% added leverage." Is this leverage achieved through swaps or margin? And importantly—how does this leverage interact with the volatility of the 0DTE strategy?

ANSWER (Si Katara):
The added leverage in the Lift series is achieved through swaps, not margin at the fund level.

Importantly, leverage is applied to the strategy, not indiscriminately to market exposure. That distinction matters. We’re amplifying the income engine while remaining disciplined about volatility and risk controls.

Leverage increases both opportunity and responsibility — which is why these funds are designed for investors who understand that tradeoff.

Editor's Note: Si's point about applying leverage to the strategy (not blanket market exposure) really resonated. Most retail investors using margin are leveraged against the entire market; a "flash crash" can wipe them out instantly. As Warren Buffett famously said, you only find out who is swimming naked when the tide goes out.

Simple math example: If you're 2x leveraged to the broad market and it drops 10% in a flash crash, your account falls ~20% (before fees/margin calls). But with TappAlpha's approach, leverage amplifies a controlled, daily income engine with built-in resets and risk sizing—mitigating blowups ahead of time. It's a reminder that smart leverage, done right, can help retail investors compete with Wall Street pros.

QUESTION 5: Target Audience
Who's the best fit for the Lift Series (TDAX/TSYX) versus the regular Core+ ones (TDAQ/TSPY)? Are the leveraged funds for long-term holding, like in a retirement account, or more for short-term trades?

ANSWER (Si Katara):
The Core+ funds (TSPY / TDAQ) are designed for long-term investors who want growth and income that work together integrated into a single allocation.

The Lift series (TDAX / TSYX) is better suited for investors seeking enhanced income and who are comfortable with higher volatility.

These are not day-trading products, but they do require a higher risk tolerance.

Editor's Note: For retail investors, portfolio structuring is key—build allocations that can absorb the market's inevitable punches. We saw in 2025 just how volatile things can get (and lets be honest, many of us thrive on it). But without active management and smart diversification, your ship will sink. Funds like these show how to balance offense and defense.

QUESTION 6: Lessons from the Industry
We recently covered Defiance’s decision to delist nearly their entire suite of "Leveraged Long + Income" ETFs due to lack of AUM and performance challenges. How is TappAlpha’s approach to the Lift Series different? What mechanisms do you have in place to prevent the "death spiral" of NAV that plagued those earlier "experimental" leveraged income products?

ANSWER (Si Katara):
We paid close attention to what happened with earlier leveraged income products.

Many failed because they:

Our approach is different in that leverage is paired with daily resets, active risk management, and a clear understanding of where leverage helps — and where it hurts.

Longevity matters more to us than novelty.

Editor's Note: For a deeper look at what went wrong with those Defiance leveraged income ETFs (low AUM, high NAV erosion and why many became "zombie" funds), check out my earlier coverage here:

Article Link: Defiance Puts Own ETFs to the Firing Squad.

It's a cautionary tale on what separates sustainable strategies from short-lived experiments.

QUESTION 7: NAV Erosion Defense
High yields sound great, but "yield traps" scare retail investors—where payouts eat away at your original investment over time. In a long bear market, what built-in protections do TappAlpha funds have to limit drawdowns and keep the principal safe?

ANSWER (Si Katara):
High yields are meaningless if capital steadily erodes.

Our primary defenses include:

We’re explicit that income is part of the outcome — not the only outcome. That framing shapes how capital is managed, particularly during adverse market conditions.

The Frontier (Crypto & The Future)

QUESTION 8: The Crypto Question
We have seen massive institutional inflows into Bitcoin and Crypto-proxy funds (like MSTR or COIN yield funds) recently. Does TappAlpha’s 0DTE strategy apply to volatile assets like Bitcoin? Is a "TappAlpha Bitcoin" fund on the roadmap?

ANSWER (Si Katara):
Volatility is the raw material for option premiums, which makes crypto-linked assets an interesting area to explore for a 0DTE framework. We’ve received inbound interest and are actively studying where and how the strategy could apply responsibly. That said, any expansion depends on market structure, liquidity, and risk-management considerations that need to be right for long-term use. If those conditions align, it’s the type of opportunity we would evaluate thoughtfully.

QUESTION 9: Vision for the Industry
We’ve seen the income ETF space evolve rapidly from simple covered calls to 0DTE, and now to leveraged income. Where do you see the industry going next? What is the "next frontier" for income investors in late 2026 and beyond?

ANSWER (Si Katara):
I think the next evolution is moving away from siloed product labels — “growth,” “income,” “alternatives” — toward outcome-oriented design.

Investors don’t actually want more tools. They want portfolios that behave well across cycles and support real financial lives.

That’s where we’re focused: building engines that produce durable outcomes, not just eye-catching yields.”
Si Katara - Founder & CEO - TappAlpha

In Si’s letter to investors wrapping up 2025 (dated December 31), he reaffirmed TappAlpha's commitment: “Growth + Income can be done better…..not by chasing trends, but by staying anchored to a clear mission: to make powerful investing strategies simple, actionable, and transparent.” As we hit mid-February, the data shows they are delivering on that promise and Si appears on track for a strong quarter relative to the field.

If you'd like to master analyzing funds like these and access the tools mentioned throughout, head to www.retailinvestorreport.com and kickstart your income investing journey today.

Until next div date, take care folks—
Retail Investor Reporter Out

_{Disclaimer: The information in this newsletter, including discussions of ETFs, strategies, performance comparisons, and interviews, is provided for informational and educational purposes only. It does not constitute investment, financial, tax, legal, or other professional advice, nor is it a recommendation to buy, sell, hold, or otherwise transact in any security, fund (including TSPY, TDAQ, TSYX, TDAX, or any other mentioned products), or investment vehicle.}

_{Investing in ETFs, particularly those employing options strategies (such as covered calls or 0DTE), leverage, or focused on high yields, involves significant risks, including the potential for substantial loss of principal, NAV erosion, volatility, opportunity costs, and other factors. High distributions may include return of capital, which can reduce your invested amount over time. Past performance, yields, or comparisons shown are not indicative of future results and may not reflect current market conditions.}

_{All opinions, analyses, and views expressed (including those in the interview) are those of the author or interviewee and may change without notice. They should not be relied upon as the basis for any investment decision. Readers are strongly encouraged to conduct their own due diligence, review fund prospectuses and official documents, and consult with a qualified financial advisor, tax professional, or other advisor to assess suitability based on their individual circumstances, risk tolerance, and financial goals.}

_{The author, RetailInvestorReport.com, and any affiliated parties disclaim any liability for losses or damages arising from the use of or reliance on this content. No guarantee is made regarding the accuracy, completeness, or timeliness of the information provided.}