In this episode of Excess Returns, we sit down with Shawn Gibson and Eric McArdle of Liquid Strategies to explore the rapidly growing world of option-based ETF strategies. With the rise of covered calls, buffered products, and hedged equity funds, it’s more important than ever for investors to separate smart solutions from risky marketing gimmicks. Shawn and Eric break down how their firm approaches overlays, income generation, and downside protection in a way that helps advisors and investors achieve better long-term outcomes.

• The evolution of options in ETFs and why adoption has accelerated

• Common flaws in covered call strategies and the risks investors miss

• How Liquid Strategies uses option overlays to add return, income, and downside protection

• The “Swiss Army knife” approach to using put spreads for multiple portfolio goals

• The importance of timeframe in option strategies and the debate around 0DTE

• Why “high yield” products often just return investor capital

• Using options for true risk management and hedging vs. cosmetic protection

• How Liquid Strategies structures its ETF suite and interval funds

• Where hedged equity and bond overlays can serve as ballast in portfolios

• Standard closing lessons for investors on staying invested and balancing risk

00:01 – Introduction to Liquid Strategies and option-based ETFs
02:34 – The rise of options in portfolios and industry evolution
05:29 – Flaws in common options strategies
08:19 – Covered calls: why they often disappoint
12:00 – Balancing upside, downside, and income in overlays
15:31 – What overlay strategies really mean
20:19 – The “Swiss Army knife” of selling put spreads
24:09 – Why timeframe matters and 0DTE options debate
28:56 – How rates and volatility impact option overlays
32:59 – The importance of systematic but flexible processes
36:46 – High yield traps and returning investor capital
43:04 – Using options for hedging and risk management
46:47 – How advisors incorporate overlays into portfolios
48:54 – ETFs vs. interval funds explained
54:26 – Where overlays fit in today’s asset allocation
57:55 – Closing lessons for investors