Simplify US Equity PLUS Downside Convexity ETF (SPD) Covered Calls

The Simplify US Equity PLUS Downside Convexity ETF (SPD) is an actively managed fund that provides exposure to U.S. large-cap equities while utilizing a systematic options overlay. The fund invests primarily in equity ETFs to maintain core market exposure, while a dedicated options budget is used to purchase put options. This strategy is designed to create downside convexity, potentially enhancing performance during significant market declines by providing a hedge against extreme volatility.

You can sell covered calls on Simplify US Equity PLUS Downside Convexity ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for SPD (prices last updated Mon 4:16 PM ET):

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SPD is designed as a capital-efficient tool for investors who want to maintain traditional market participation while explicitly managing downside risk. Unlike standard equity funds, which may experience linear losses during a downturn, the fund’s options overlay aims to provide "convex" protection—meaning the hedge becomes more effective as market declines deepen. This is achieved by systematically allocating a portion of the fund’s assets to purchase put options on the S&P 500 Index or related ETFs.

The fund’s investment process is split into two primary components. The core holding provides passive, broad-market exposure, ensuring the fund tracks the general direction of the U.S. large-cap equity market. The secondary component is the "convexity budget," where the investment team actively manages a series of put options. This layer is intended to act as a structured insurance policy, helping to buffer the portfolio against "Black Swan" events or periods of severe market dislocation without requiring the fund to divest from equities or move into cash.

Competitive Landscape

SPD operates in the rapidly growing "defined outcome" or "buffered" ETF space. It competes with products that seek to manage equity volatility through derivative strategies:

1. Innovator S&P 500 Buffer ETF (PJAN): Offers a fixed, buffered outcome over a specific period, contrasting with SPD’s dynamic, continuous options overlay.
2. FT Cboe Vest U.S. Equity Buffer ETF (BTR): Another competitor using structured buffers to limit downside, often compared when investors are looking for clearer risk-mitigation parameters.
3. SPDR S&P 500 ETF Trust (SPY): While not a direct competitor in strategy, it serves as the benchmark against which investors measure SPD’s upside capture and hedging effectiveness.

Strategic Outlook and Innovation

The strategic objective of SPD is to offer an alternative to traditional "defensive" equity factors, such as low-volatility or high-dividend stocks, which may fail to protect capital during systemic market shocks. By using options rather than asset class rotation, the fund maintains its equity posture while seeking to dampen volatility.

Innovation at the fund level is focused on optimizing the "convexity budget"—finding the balance between the cost of the put options and the degree of protection provided. As market conditions fluctuate, the management team recalibrates these positions to ensure the fund remains aligned with its goal of providing downside protection without capping the long-term potential of the underlying equity holdings.

Want more examples? SPCX Covered Calls | SPDN Covered Calls