In recent months, equity markets have defied easy categorization. The S&P 500 Index posted its longest winning streak in 21 years, amid tariff overhangs, geopolitical tensions and growing uncertainty in corporate guidance.¹ At the same time, U.S. gross domestic product (GDP) contracted by 0.3% in Q1,² largely due to front-loaded imports ahead of tariff hikes, which may mask underlying domestic resilience. This mix of strong earnings, aggressive buybacks and persistent fragility in macroeconomic indicators has created a fog that even seasoned investors struggle to navigate. Are we witnessing the tail end of post-pandemic momentum or the early tremors of a larger reckoning?

Professional sentiment offers no clear resolution. According to Barron's Big Money poll, institutional investors are the most bearish they've been in nearly 30 years, with just 26% identifying as bullish and 32% as outright bearish.³ The skepticism is rooted in stretched valuations, tariff risks and an earnings outlook plagued by uncertainty. Even among companies posting solid results, there is widespread reluctance to issue firm guidance.⁴ In response, some investors have turned to more defensive or contrarian exposures—international value stocks, dividend plays and even precious metals. But none of these solutions addresses the core dilemma: the direction of equities from here remains inherently unpredictable.

Given this backdrop, it's not surprising that income-oriented strategies are gaining renewed attention. Notably, the surge in corporate buybacks—$500 billion and counting in 2025—signals that companies themselves are favoring cash-return mechanisms over new growth investments.⁵ With volatility remaining elevated and realized returns uncertain, many investors are now looking at the volatility market itself as a source of return. Selling options, particularly in well-constructed, risk-managed strategies, may offer a compelling profile: monetizing fear and indecision while staying agnostic about market direction.

Put differently, when directional conviction is low, the premium in uncertainty becomes an asset class. These approaches do not require the market to rise—they simply need it not to collapse. And if one believes that valuations will remain bounded by macroeconomic policy and earnings uncertainty, then harvesting premium from that bounded volatility could represent one of the most rational income strategies in today's market.

Hunting for Opportunities: The Morningstar Derivative Income Category

This is a fertile hunting ground for strategies that tend to sell options and generate income. The two largest strategies in this category are⁶:

• JPMorgan Equity Premium Income ETF (JEPI): JEPI seeks to deliver monthly distributable income and equity market exposure with less volatility. The defensive equity portfolio employs a time-tested, bottom-up fundamental research process with stock selection based on proprietary risk-adjusted stock rankings. A disciplined options overlay implements written out-of-the-money S&P 500 Index call options that seek to generate distributable monthly income.
• JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): JEPQ seeks to deliver monthly distributable income and Nasdaq 100 exposure with less volatility. The underlying equity portfolio employs an applied data science approach to fundamental research and portfolio construction. A disciplined options overlay implements written out-of-the-money Nasdaq 100 Index call options that seek to generate distributable monthly income.

Both these strategies are selling call options and holding underlying equities. The WisdomTree Equity Premium Income Fund (WTPI) is also in the same Morningstar category, but it sells put options and then holds the premiums collected in U.S. Treasuries.

Have these three strategies delivered different return profiles or income levels? Let's see.

Figure 1: Standardized Returns

Income Generation

While we frequently discuss how income is merely one component of a strategy's total return, we know that many pay it particularly strong attention. Figure 2 looks at the trailing 12-month distribution yields of the aforementioned strategies as of April 30, 2025:

• WTPI topped the list over this period, with JEPQ roughly 1% behind. These figures can always shift, so there is no guarantee that this relative ranking will always be the case.
• Of these three funds, JEPI took the third spot in the rankings.

Figure 2: Trailing 12-Month Distribution Yields

Sources: Specific fund pages on the WisdomTree and JPMorgan websites, with data as of 4/30/25, accessed on 5/5/25. Past performance is not indicative of future results.

Performance: April 2025 Year-to-Date, and Beyond

Figure 3 allows us to look at four distinct periods, recognizing that we are confined to a period from October 24, 2022, onwards. Prior to this date, WTPI was tracking a different underlying index that employed a different investment strategy.

• April 2025: The notable thing about this period was that the start of the month was looking very negative for U.S. equity performance. Then, the picture shifted quite quickly to that of a very strong U.S. equity rally. As we can see, the Nasdaq 100 Index ended the full month positive 1.6%. WTPI and JEPQ were quite close in their returns, signifying that even while they went down in the first part of the month, they were also sensitive to the later equity market recovery. JEPI delivered strong downside risk mitigation in the first part of April 2025, but did not capture as much of the sharp recovery in late April, leading to its lagging performance.
• Year-to-Date 2025: Here, JEPI provided the best downside risk mitigation, as there was volatility in February as well as April 2025. The Nasdaq 100 Index was the worst performer, but JEPQ wasn't too far behind. WTPI was able to outperform the S&P 500 Index by nearly 2%, but both delivered negative returns over this period.
• 1-Year: This period was an overall positive U.S. equity market, with the Nasdaq 100 Index and S&P 500 Index up 13.1% and 12.1%, respectively. JEPQ did best to capture most of this upside at 9.9%. WTPI outperformed JEPI in this more positive environment by 1.5%.
• October 24, 2022, to April 30, 2025: This period roughly corresponds to "post-Chat GPT's release." We know that ChatGPT was a catalyst for a very positive U.S. equity market, especially among the largest companies. The Nasdaq 100 Index returned an annualized 24.8%. Again, in the more positive period, JEPQ captured more of the upside than the other two funds. Again, WTPI outperformed JEPI, this time by roughly 1.3%, annualized. It's notable that option-writing strategies would be expected to underperform equity benchmarks in upwardly trending, positive markets.

Figure 3: Performance in Positive and Negative Overall Market Environments

Sources: WisdomTree, FactSet, specifically data from the Fund Comparison Tool in the PATH suite of tools, accessed 5/3/25, with returns as of 4/30/25. NAV denotes total return performance at net asset value. Prior to 4/4/25, WTPI was known as the WisdomTree PutWrite Strategy Fund (PUTW). On that date the Fund's investment policy changed. Prior to 10/24/22, the WisdomTree PutWrite Strategy Fund was named the WisdomTree CBOE S&P 500 PutWrite Strategy Fund and tracked the total return performance, before fees and expenses, of the CBOE S&P 500 PutWrite Index. Past performance is not indicative of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the most recent month-end and standardized performance, click the relevant ticker: WTPI, JEPI, JEPQ.

Conclusion: Equity Premium Income Is an Exciting Concept for 2025

In early May 2025, we have many investors searching for direction. Tariff policy is constantly evolving. While there is never certainty in markets, the double-digit returns experienced in 2023 and 2024 likely created a feeling of comfort that has long since dissipated. We note that a strategy of selling put options and collecting premium income has strong potential if the behavior of U.S. equities is more one of searching for direction and less one of excessive trending. A trailing 12-month distribution yield above 10% is also quite interesting for many.

Figure 4: Additional Information

Sources: WisdomTree's Fund Compare tool and JPMorgan's specific fund pages on the JPMorgan website. Assets under management data is as of 3/31/25. Subject to change.

¹ Source: M. Horan, "Stock Market Winning Streak Best in 21 Years. Why It's Looking Fragile," Barron's, 5/3/25.

² Refers specifically to U.S. real GDP on a seasonally adjusted annual rate (SAAR) basis. This figure is for Q1 2025, based on the initial estimate released by the U.S. Bureau of Economic Analysis.

³ Source: V. Subbaraman, "America's Money Managers Are Bearish. That's Bullish," Barron's, 5/3/25.

⁴ Source: Horan, 5/3/25.

⁵ Source: C. Smith, "U.S. Companies Launch $500bn Share Buyback Spree in First Four Months of 2025," Financial Times, 5/5/25.

⁶ Ranking by assets under management as of most recent quarter-end, 3/31/25, with source Morningstar Direct.