TSPY vs XDTE: Which Is the Better Pick in 2026?

Overview

TSPY and XDTE are both ultra-recent equity ETFs that use daily-expiring options on the S&P 500 to generate high current income while tracking the underlying index. TSPY sells 0DTE call spreads on SPY itself and distributes monthly, while XDTE sells 0DTE covered calls on SPX (the index) and distributes weekly. Both launched within a day of each other in August 2024 and charge similarly low fees, but they differ materially in yield, distribution frequency, and the mechanics of how they cap upside.

How they differ

The headline difference is yield: XDTE offers 19.78% versus TSPY's 13.83%, a gap driven partly by XDTE's weekly payout schedule (which front-loads distributions) and partly by the nature of covered call writing on SPX itself versus call spreads on SPY. XDTE's covered-call structure means it holds the full index and sells calls against it; TSPY's approach is less transparent but involves call spreads, which limits both downside and upside participation. Both have nearly identical beta of 0.0, meaning neither tracks the S&P 500's moves directly—they're capped. XDTE's AUM is marginally larger at $287.9 million versus TSPY's $264.4 million, and its expense ratio is 20 basis points higher (0.97% vs. 0.77%).

Who each is best for

• TSPY: Investors seeking monthly income with a lower yield who believe the call-spread structure may preserve more upside capture than a traditional covered call, or who prefer less frequent distributions to minimize cash-management friction.
• XDTE: Income-focused investors comfortable with weekly payouts and a hard cap on appreciation, who want the simplicity and transparency of a pure covered-call approach and can tolerate a 19.78% yield in exchange for limited stock participation.

Key risks to know

• NAV erosion from high distribution yields. Both funds distribute 13–20% annually while holding equities with single-digit total returns. NAV will decline unless the underlying equity and option premium together exceed the payout rate; at these yields, distributions will likely rely on partial return-of-capital treatment.
• 0DTE roll risk and timing. Daily option expirations mean the fund must roll calls every day; gaps in market timing, volatility spikes, or unfavorable bid-ask spreads could force unfavorable rolls, especially in market stress or low-liquidity windows.
• Capped appreciation. Both funds limit capital gain participation; in a strong bull market, neither will match SPY or SPX returns. XDTE's covered-call cap is more explicit; TSPY's call-spread structure is opaque but similarly constraining.
• Leverage and leverage-like amplification risk. Although beta is 0.0, the combination of options overlay, daily rolling, and high yield can produce outsized downside in sharply declining markets, as the fund may be forced to realize losses while collecting shrinking premiums.
• Liquidity and tracking divergence. Both are tiny ($260–290M AUM) and newly launched. Liquidity in the fund's shares could evaporate in market stress, and trading spreads may widen; the true value of the option strategy may only become clear after a full market cycle.

Bottom line

XDTE offers significantly higher yield but locks in that income via a transparent weekly covered-call structure; TSPY is lower-yield and less frequent, with more opaque mechanics. If you prioritize maximum current income and can accept weekly distributions, XDTE's 19.78% yield stands out—but both carry genuine roll risk and NAV decay. If you value simplicity and transparency, neither fully delivers at this stage; both are too new and too small to have proven track records through a full bull or bear cycle. Past performance doesn't predict future results, and these strategies' actual returns will depend heavily on volatility regime and execution quality in option markets.