Ask the Strategist: Unpacking Options-Based Income ETPs with Oktay Kavrak

Oktay Kavrak, Director of Communications and Strategy at Leverage Shares and IncomeShares, joins this edition of Ask the Strategist to unpack the rise of options-based ETPs, their growing appeal in Europe, and how they help investors generate income while staying invested.

Plus, he spills the tea on Leverage Shares' visual marketing magic and how he became a LinkedIn sensation in the finance community.

Can you tell us about the overall boom in these kinds of products over the last few years?

Options-based ETPs sit at the intersection of three major trends in the ETF space: active strategies, single-stock exposure, and derivatives-linked products. In a market where valuations seem stretched, these products offer an alternative to traditional income-generating assets like REITs, corporate bonds, and dividend stocks. Instead of keeping capital on the sidelines, they allow investors to stay invested while generating income—with potential downside cushioning from option premiums.

What’s your view on the appetite for these markets and what you're doing to educate investors on the benefits and risks?

Investor appetite for options-based income products is very strong for two key reasons:

1. Enhanced yield without selling core holdings – Most investors already hold major indices or their favorite stocks. These strategies enable them to generate additional income without liquidating existing positions. Previously, investors had to choose between growth and dividend stocks, but covered call ETPs on single stocks effectively offer a blend of both.
2. More frequent distributions – Dividend investors seeking regular cash flow find these products attractive. Even high-yield dividend stocks typically distribute quarterly, whereas IncomeShares ETPs provide monthly distributions, aligning better with investor cash flow needs.

I don’t expect these products to fully replace an investor’s TSLA holdings, but I can see why they might substitute part of their exposure with a Tesla Options ETP—essentially answering the question, "What if Tesla paid a high dividend?"

However, it’s crucial for investors to understand both the benefits and risks. While these strategies enhance yield, they also cap upside potential if the underlying stock rises sharply. To support investor education, we:

• Produce educational content via newsletters, blog posts, and webinars.
• Partner with financial educators to reach a wider audience.
• Provide clear, transparent performance and risk disclosures.

How do these products differ from US versions?

As one of the fastest-growing categories globally, we’re excited to bring these products to Europe via our IncomeShares brand. These are the first covered call ETPs tied to single stocks and the first index ETPs using 0DTE (zero-day-to-expiry) options.

Key differences from US versions:

• Lower fees – Our expense ratio is below the US category average.
• Tax efficiency – Thanks to the Ireland-domiciled structure, our offerings avoid the 30% US withholding tax (WHT) at source, a major advantage for non-US investors.
• Diverse exposure – Unlike many US funds focused on indices like the S&P 500, IncomeShares provides exposure to individual stocks and even commodities like gold.
• Multi-currency availability – Given Europe’s diverse markets, our ETPs are available in USD, GBP, and EUR.

These factors make IncomeShares a truly European solution tailored to local investor needs.

Can you explain what the distribution number means and why it changes – is a 100% distribution yield too good to be true?

The distribution yield reflects the annualized income generated through option premiums and/or cash held, divided by the ETP’s net asset value. However, option premiums fluctuate based on volatility, market conditions, and stock performance—causing distributions to vary month to month.

Don’t judge a book by (only) its cover. As with any investment, there’s no free lunch. A 100%+ distribution yield can be misleading if taken at face value.

High payouts can sometimes result from:

• A significant drop in the fund’s net asset value (NAV), making the yield appear artificially high.
• A temporary spike in volatility, leading to abnormally high option premiums.

We aim to write options on 100% of the portfolio, ensuring full coverage, and we do not withhold any of the premiums generated. This allows end investors full control over whether to reinvest or use the cash flow as they see fit.

What has been the most popular product so far?

Among our IncomeShares lineup, the most popular ETPs have been those tied to single assets like TSLA and gold, as well as 0DTE products linked to US indices.

Since launching just six months ago, these products—still relatively new to European investors—have seen encouraging adoption. AUM has grown steadily, and trading volumes have surged nearly 5x over the last four months.

Overall, the highest demand has been for products with the highest yield, highlighting investor preference for high monthly payouts. These products have resonated with those looking to enhance their income while maintaining exposure to top-performing companies.

We plan to launch many more IncomeShares products in Q2, expanding into additional single stocks and asset classes.

Leverage Shares has been doing a great job in marketing with charts, infographics, and more. Who's the mastermind behind all of this, and how do you brainstorm as a team?

It’s a team effort. We take data-driven storytelling seriously - because finance doesn’t have to be boring. I lead the strategy and content direction, but we have a talented group that brings everything to life.

Our brainstorming sessions are what I call “organized chaos”. Sometimes we work on a particular piece of content for days – all for it to ultimately be overridden by breaking news. We track market trends, listen to what investors are asking, and think, "How can we make this clearer and more engaging?" Sometimes it’s a simple chart - other times, an animated breakdown. If it makes someone stop scrolling, we know we did it right.

Last but not least, you've seen tremendous personal follower growth on LinkedIn. What's the secret sauce, and what’s your most viral post ever?

I wish I had a secret formula to sell, but the truth is—there isn’t one. My approach is simple: if something makes me laugh or piques my interest, I investigate it. Then I try to adapt it to the platform – because using the same content across channels simply does not work. I think my biggest strength is adding a sarcastic spin on a timely event—because humor is the one universal language (yes, everyone speaks it).

2024 was a pretty good year for my personal channel, I was able to gather over 33 million impressions.

• The most impressions – 5.1M
• The most likes – 22.2K

About Oktay Kavrak

Oktay Kavrak is the Director of Communications and Strategy at Leverage Shares and IncomeShares, overseeing key relationships and sales development to drive business growth across Europe.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM and DeGiro.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.