An interview with Liquid Strategies’ Eric Mardo about an income strategy built on put credit spreads, with the flagship OVL and related funds OVF and OVS. The core pitch is that these funds seek to monetize persistent demand for downside protection on indices like the S&P 500 while avoiding the upside cap of traditional covered-call ETFs. They aim for high monthly income plus equity-like exposure, but accept that they should lag in sharp selloffs.
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This episode is essentially a product-and-strategy interview: host Steve from The Frugal Expat introduces Eric Mardo of Liquid Strategies / Overlay Shares to explain a family of income ETFs built around put credit spreads rather than covered calls. The main thesis is straightforward: instead of selling calls and capping upside, Liquid Strategies sells put spreads on the S&P 500 and similar index exposures to harvest rich option premium driven by persistent demand for downside protection. …
Tactically, these funds look attractive when volatility and downside hedging demand stay elevated, but they remain exposed to a sharp equity drawdown. Near-term attention should stay on how richly SPX downside is priced and whether OVL can keep distributing near current levels.
Over the next few months, the setup favors steady income generation if markets are choppy-to-firm rather than crashing. The key validation signal is that the spread overlay keeps producing premium without frequent tail losses; a sustained bear market would challenge that base case.
Structurally, the interview argues that option-income products may migrate from upside-capped covered calls toward defined-risk put-spread overlays. If investor demand for insurance remains durable, index-based income overlays could become a lasting portfolio building block rather than a niche tactic.
Liquid Strategies has been running options-based institutional strategies since 2013 and only later expanded into ETFs.
Eric says the business began with separately managed accounts for large family offices in 2013 and ETFs came in 2019.
Covered-call ETFs feel attractive because they generate income, but they cap upside in a way many investors only appreciate after seeing multi-year performance.
Eric frames covered calls as a tradeoff that becomes obvious only after looking back over years.
Because many investors sell covered calls, option premium can get competed down, making that market less attractive over time.
He argues supply and demand lowers call-option prices when many sellers crowd in.
Can you talk about your company, what you do with the company, and what your thought process was when you guys were coming up with some of these newer funds?
Eric explains that Liquid Strategies has been around since 2013, starting with options-based separately managed accounts for large family offices. Their CIO and co-founder Sean Gibson was an options market maker. They launched ETFs in 2019 and subadvised with other asset managers. Eric's role is to tell the story to the market — he previously worked at Simplify and saw an opportunity to help people understand what they do well and don't do well.
What's behind the idea that the guest's firm was the pioneer in put credit spread ETFs but nobody had heard of them until yield went from 5% to 10% after switching to monthly distributions?
The guest acknowledged the shift and explained they originally viewed the product as a total return vehicle, but learned the market cares deeply about income distribution. The switch to monthly payouts made the product more visible and appealing to investors who value income certainty.
How did the decision to move from quarterly to monthly distributions come about, given you were originally trying to beat the S&P 500 by about 1% per year?
The guest explained the decision through the analogy of slicing apples — people prefer income because it gives them certainty, immediate gratification, and optionality. The product shift from quarterly to monthly was a way to 'slice and bag the apple' — delivering the same total returns but prioritizing income over price appreciation. They waited a couple months to build dividend history before marketing the change, originally planning to wait a full year.
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