The 5 Horsemen to Income on the S&P 500: Strategies for Smarter Cash Flow

For investors seeking high income from the S&P 500 without abandoning equity exposure, a new group of option-based ETFs has emerged as consistent cash-flow generators. I call them “The Five Horsemen of Income.”

These funds take different approaches—daily call writing, put spreads, collars, volatility-adaptive call strategies—but they share one goal: steady, reliable yield on top of broad market exposure.

Together, they form a diversified income engine that has delivered an equally weighted average yield of 10.8%, far above the S&P 500’s traditional dividend yield.

Here’s how each one works—and what investors should know about the trade-offs.

1. TSPY – Daily Call Writer (14% Yield)

TSPY extracts income “a scrap at a time” by writing daily call options on the S&P 500. This allows the fund to consistently capture the overnight gap, a portion of price movement that occurs outside regular trading hours.

Pros:

• Consistent daily premium collection

• Reliable gap capture

Risks:

• Exposed to large intraday rallies

• Rapid up-moves can cause underperformance

TSPY functions almost like a high-frequency income engine—small amounts collected frequently.

2. SPYI – Monthly, Out-of-the-Money Calls (12% Yield)

SPYI writes out-of-the-money (OTM) calls with roughly 7-week expirations, rolling them at the end of each month. Importantly, SPYI does not write on 100% of its notional value.

This gives the ETF breathing room to capture partial upside when the market rallies through strike prices.

Pros:

• Attractive yield with better upside participation

• Designed for smoother monthly income

Risks:

• Some upside is still capped

• Less income than a full-coverage call strategy

SPYI is ideal for investors who want balance: income, but not at the total cost of growth.

3. OVL – Laddered Put Spreads (10.5% Yield)

OVL takes a different path, generating income through OTM put spreads. It writes spreads on about 30% of the portfolio each week across a three-week ladder.

Pros:

• No upside cap

• Can withstand mild or gradual pullbacks

Risks:

• Put spreads amplify losses during grinding or prolonged declines

• Sharp selloffs can breach multiple layers of spreads

OVL’s structure thrives in sideways or mildly rising markets—but becomes vulnerable as declines accelerate.

4. GPIX – Volatility-Adaptive Weekly Call Writing (8.5% Yield)

GPIX writes weekly call options four weeks out, but only on a small slice of the fund’s notional value. Its secret weapon is adaptability: the portion it writes changes based on market volatility.

When volatility rises, GPIX can achieve its income target while writing on less notional exposure. When volatility is low, it writes a bit more.

Pros:

• Quick responsiveness to volatility shifts

• Lower notional exposure during turbulent markets

• Smooth, predictable income targeting 8.5%

Risks:

• Lower yield than aggressive call writers

• Still limits some upside

This makes GPIX one of the more risk-controlled weekly writers available.

5. KHPI – Call Spreads + Quarterly Collars (9% Yield)

KHPI uses a hybrid approach:

• Call spreads to capture more upside

• Quarterly collars, set about 5% out of the money, for systematic downside protection

This combination helps smooth volatility, and the available 10-year backtest suggests the strategy performs reliably through multiple market regimes.

Pros:

• Superior upside capture compared to traditional covered-call funds

• Downside risk control through collars

• More stable long-term path

Risks:

• Collars limit some gains during extreme rallies

• Quarterly resets may miss rapid shifts in volatility

KHPI stands out for investors wanting income and a more defensive profile.

What the Numbers Say: Income vs. Total Return

From September 30, 2024 to March 31, 2026, the difference in total return between:

• Holding SPY outright, and

• Holding the Five Horsemen equally weighted

…was just 1.1%.

On an annual basis, investors traded roughly 0.75% per year of total return in exchange for a high, steady income stream averaging 10.8%.

For many retirees or income-focused investors, that trade-off is more than acceptable—it's the point.

Final Thoughts: Building an Income-Focused S&P 500 Strategy

The “Five Horsemen” are not a monolith—they use five different option strategies to pursue yield:

• Daily calls

• 7-week OTM covered calls

• Laddered put spreads

• Volatility-adaptive weekly calls

• Collars + call spreads

Blending them provides diversification not only in yield sources but also in risk profiles, market behavior, and volatility sensitivity.