The Mag 7 Income Trade Is Here: Tuttle's New ETF Bets On Big Tech Volatility
Tuttle Capital Management has launched a new ETF that aims to turn the volatility of the so-called "Magnificent 7" into a source of income, rather than just causing sleepless nights.
The Tuttle Capital Magnificent 7 Income Blast ETF (CBOE: MAGO) started trading on CBOE on Tuesday. It offers investors exposure to Alphabet, Inc (NASDAQ:GOOGL), Amazon.com, Inc (NASDAQ:AMZN), Apple, Inc (NASDAQ:AAPL), Meta Platforms (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), Nvidia Corp (NASDAQ:NVDA), and Tesla, Inc (NASDAQ:TSLA), combined with an options-driven income strategy.
Unlike traditional Magnificent 7 funds that focus solely on growth, MAGO is actively managed and designed to provide current income along with equity-like exposure to the mega-cap tech stocks that have dominated market performance in recent years.
An Options-First Take On Big Tech
MAGO combines direct exposure to the Magnificent 7 with a systematic put-spread strategy, using listed options and FLEX Options. This approach aims to profit from the stocks' typically high volatility while keeping economic exposure that mirrors the price return of the underlying basket before fees and expenses.
In practice, the fund seeks to generate income by selling put options on the Magnificent 7 stocks and buying further out-of-the-money puts on the same stocks. This put-spread structure is designed to produce option premium while defining downside risk on the options portion of the portfolio.
Turning Volatility Into Cash Flow
The Magnificent 7 have become central to index returns and innovation stories, but they are also some of the most volatile large-cap stocks in the market. MAGO's strategy is based on the idea that this volatility can be turned into profit through careful options positioning, rather than simply dealt with.
The fund plans to regularly rebalance and roll its put spreads, re-establishing positions as existing options expire or are closed. This rules-based process aims to keep the strategy in line with current market conditions and income goals, though results will vary based on market changes.
For investors who believe Big Tech's dominance will continue, while also wanting to earn income, MAGO offers a more income-focused way to stay involved with the Magnificent 7. Whether it delivers an "income blast" or just a slight increase will depend, as always, on how volatile the Magnificent 7 choose to be.
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