Shawn Gibson, Co-founder and CIO of Liquid Strategies, and Eric McArdle, Co-founder and CEO, discuss the fascinating world of option-based strategies. They unpack the rapid rise of options in ETFs, highlighting the pitfalls of covered calls and the importance of risk management. The duo explores how to properly utilize overlays for income and protection, emphasizing the complexities of high-yield products. They also delve into innovative techniques like put spreads and interval funds, offering insights on balancing risk and enhancing portfolio performance.
01:01:43
forum Ask episode
web_stories AI Snips
view_agenda Chapters
auto_awesome Transcript
info_circle Episode notes
volunteer_activism ADVICE
Short-Dated, Laddered Options Reduce Path Risk
Favor short-dated options to capture accelerated time decay and harvest more premium.
Ladder expirations to reduce path dependency and avoid betting on a single day.
insights INSIGHT
0DTE Amplifies Intraday Moves, Not Long-Term Risk
Zero-DTE increases intraday amplification but doesn't alter longer-term volatility.
Betting on one-day moves is impossible to systematize reliably.
volunteer_activism ADVICE
Let Strike Selection Float With Volatility
Delta-target option strikes to float out-of-the-money levels with volatility.
When VIX rises, sell further OTM to gain bigger downside cushion rather than just collect more premium.
Get the Snipd Podcast app to discover more snips from this episode
In this episode of Excess Returns, we sit down with Shawn Gibson and Eric McArdle of Liquid Strategies to explore the rapidly growing world of option-based ETF strategies. With the rise of covered calls, buffered products, and hedged equity funds, it’s more important than ever for investors to separate smart solutions from risky marketing gimmicks. Shawn and Eric break down how their firm approaches overlays, income generation, and downside protection in a way that helps advisors and investors achieve better long-term outcomes.
The evolution of options in ETFs and why adoption has accelerated
Common flaws in covered call strategies and the risks investors miss
How Liquid Strategies uses option overlays to add return, income, and downside protection
The “Swiss Army knife” approach to using put spreads for multiple portfolio goals
The importance of timeframe in option strategies and the debate around 0DTE
Why “high yield” products often just return investor capital
Using options for true risk management and hedging vs. cosmetic protection
How Liquid Strategies structures its ETF suite and interval funds
Where hedged equity and bond overlays can serve as ballast in portfolios
Standard closing lessons for investors on staying invested and balancing risk
00:01 – Introduction to Liquid Strategies and option-based ETFs 02:34 – The rise of options in portfolios and industry evolution 05:29 – Flaws in common options strategies 08:19 – Covered calls: why they often disappoint 12:00 – Balancing upside, downside, and income in overlays 15:31 – What overlay strategies really mean 20:19 – The “Swiss Army knife” of selling put spreads 24:09 – Why timeframe matters and 0DTE options debate 28:56 – How rates and volatility impact option overlays 32:59 – The importance of systematic but flexible processes 36:46 – High yield traps and returning investor capital 43:04 – Using options for hedging and risk management 46:47 – How advisors incorporate overlays into portfolios 48:54 – ETFs vs. interval funds explained 54:26 – Where overlays fit in today’s asset allocation 57:55 – Closing lessons for investors
Excess Returns