The Options Wheel Strategy ETF Most Income Investors Have Never Heard of That Pays a ~12% Yield

Among the many investing communities on Reddit, one that rarely gets the same attention as r/WallStreetBets is r/ThetaGang. The name comes from theta, the options Greek that measures time decay. Rather than buying speculative options, members of the community generally prefer to be on the opposite side of those trades by selling options and collecting premiums as time passes.

One of their favorite strategies is known as the wheel. It starts by selling cash-secured puts on a stock or ETF. If the option expires worthless, you simply collect the premium and sell another put. If you’re assigned, you buy the shares at the strike price and immediately switch to selling covered calls against that position. Once those shares get called away, you go back to selling cash-secured puts and repeat the process. The downside is that the strategy is fairly hands-on. You need to understand options, monitor positions, and manage assignments.

For investors who would rather outsource that work, there’s another option. The Peerless Options Income Wheel ETF (WEEL) is the first ETF built around systematically implementing the wheel strategy. Here’s what investors should know about how WEEL works and how it has stacked up against more established covered call ETFs.

What Is WEEL?

WEEL begins by writing out-of-the-money (OTM) cash-secured put options on a portfolio consisting primarily of sector ETFs, although it may also use other liquid ETFs with elevated implied volatility. Current exposures include areas such as gold miners, utilities, Chinese internet stocks, the Nasdaq-100, emerging markets, software, homebuilders, energy, and silver, among others.

Selling OTM puts allows WEEL to collect option premium while establishing a downside entry point. If the underlying ETF remains above the strike price through expiration, the fund simply keeps the premium and writes another put. If the option finishes in the money, WEEL purchases the ETF at the predetermined strike price at potentially more favorable valuations.

Once assigned, the strategy shifts into the second phase by writing covered calls against those newly acquired holdings. If prices recover above the call strike, the shares are called away, allowing WEEL to realize both the option premium and any capital appreciation between the purchase price and strike price. The process then resets back to selling cash-secured puts.

The strategy is designed to perform best when markets remain relatively range-bound and volatile. As of June 30, 2026, WEEL offers an 11.86% distribution rate, calculated by annualizing its most recent quarterly payout and dividing it by the fund’s current net asset value.

How Has WEEL Performed?

I compared WEEL against the JPMorgan Equity Premium Income ETF (JEPI) over the 2.12-year period from May 16, 2024, through July 1, 2026 via testfolio.io. During that period, WEEL delivered a cumulative total return of 27.79%, comfortably outperforming JEPI’s 16.69%. Risk-adjusted returns also favored WEEL. The ETF generated a Sharpe ratio of 0.65, compared with 0.34 for JEPI, suggesting investors were compensated more effectively for the risk they assumed over the measurement period.

That said, WEEL has one disadvantage that could narrow this performance gap over time: its cost. The fund carries a 1.24% gross expense ratio, consisting primarily of a 1.09% management fee alongside 0.15% in acquired fund fees and expenses from the underlying ETFs it owns. After a 0.25% fee waiver, investors currently pay a 0.99% net expense ratio. Personally, I think bringing that figure closer to 0.75% would make the strategy substantially more competitive.

My other concern is size. WEEL currently manages approximately $38.74 million in assets, leaving it below the roughly $50 million AUM threshold where many niche ETFs begin attracting more consistent investor interest. Smaller ETFs can face a higher risk of closure if they fail to gather assets over time.

Even so, WEEL remains one of the more interesting income ETFs on the market. Rather than relying solely on covered calls, it systematically monetizes both sides of the options market through the wheel strategy, offering investors exposure to a strategy that has traditionally required considerably more hands-on management.

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