Hamilton Reiner, CIO of the US Core Equity Team, Head of US Equity Derivatives, J.P. Morgan Asset Management
As a kid, I wanted to be a doctor. But when I was in medical school, I saw blood three times and fainted three times. Then, I switched and went to business school – took my first class on options and I was hooked.
I’ve spent almost 40 years trading options, over a decade at J.P. Morgan Asset Management. While trading stocks allowed me to buy or sell, with options I could express a variety of views. That “optionality” creates a powerful investment tool which, combined with strong risk management and portfolio construction, may deliver outcome-orientated strategies.
The lesson that’s stayed with me is simple: use options in a disciplined way, design strategies thoughtfully and focus on delivering outcomes investors care about.
Income is often a key focus for investors. And income is at the heart of our Equity Premium Income (EPI) ETF strategies, which use index options to aim to generate consistent income alongside dividends. Paired with actively managed equity portfolios, these ETFs can garner some equity market gains and aim to generate additional income in volatile markets, with the potential for experiencing smaller drawdowns than the index.
Income comes from two distinct sources: dividends from actively managed equity portfolios, and premiums earned from a disciplined options overlay strategy.
While using options may sound complicated, the approach is straightforward: by selling index call options, we receive premiums – income for providing the right to exercise the options. By agreeing to sell equity holdings at a set price within a set period, we earn additional income in exchange for limiting potential market gains.
The result: strategies that aim to generate higher income, participate in market gains, and may help reduce overall portfolio volatility by using option income to support returns1.
Volatility and option premiums The EPI ETFs come into their own may present enhanced income opportunities in volatile markets. When markets get more volatile, options buyers tend to pay higher premiums, which translates into potentially higher income for investors. We target a specific option delta rather than a fixed strike price, so when volatility rises, our expected premium income may increase as well.
Options premiums and market volatility
Source: J.P. Morgan Asset Management, Bloomberg, and CBOE. Data as of 28.02.2026. Past performance is not a reliable indicator of current and future results. For illustrative purposes only. The graph above illustrates the upside opportunity of selling rolling monthly out of the money 30-delta calls.
In April 2025, the “Liberation Day” announcement jolted investors. Market volatility rose sharply after the announcement, affecting investor portfolios in various ways. Our approach is built for those moments, helping investors stay invested with income potentially offsetting some downside. Elevated volatility translated into stronger income distributions for our strategies.
Trading some upside for income
However, we remain candid about the trade-off and recognise there are periods that these ETFs will find more challenging. For example, in the narrow, momentum-led rally through 2025, our approach lagged a full-beta, no-income strategy. That’s the “bird in the hand” trade: income today in exchange for limiting potential future gains.
But markets don’t stay narrow forever and can change over time. Our equity teams see earnings broadening across regions and sectors beyond the biggest US technology names. We believe our EPI active ETFs are well positioned to participate in market gains while delivering income opportunities. Investors may choose from global and US options with JPMorgan Global Equity Premium Income Complex ETF (JEGA) and JPMorgan Equity Premium Income ETF (JEPI) with lower-beta portfolios, and our Nasdaq option with JPMorgan US 100Q Equity Premium Income ETF (JPEQ).
As we move through 2026, the macro backdrop looks constructive: above-trend global growth, easing recession risks and room for one more Federal Reserve rate cut. A softer US dollar and improving European purchasing managers indices support international assets. Ongoing volatility tied to Middle East conflicts could also potentially result in higher option premiums.
Conclusion
At times like these, I’m reminded of my first options class. While I didn’t fulfil my childhood dream of becoming a doctor, I learned that options — when used aptly — can turn market noise into a plan. We believe these active, income-led equity ETF strategies help investors stay invested through the cycle while generating income along the way.
Provided for information only based on market conditions as of date of publication, not to be construed as offer, research, investment recommendation or advice. Forecasts, projections and other forward looking statements are based upon current beliefs and expectations, may or may not come to pass. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecast, projections or other forward statements, actual events, results or performance may differ materially from those reflected or contemplated.
Diversification does not guarantee investment return and does not eliminate the risk of loss.
- Call option writing (selling call options) generates income in the form of option premiums. There is a potential to forego some capital appreciation as a result of writing call options. Estimated income is not guaranteed and does not imply positive return.
Further Information: For further information please email us at [email protected], telephone 1800 576 468 or visit our website am.jpmorgan.com/au/
© 2026 All Rights Reserved – JPMorgan Asset Management (Australia) Limited ABN 55 143 832 080, AFSL No. 376919
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