TappAlpha's $250M Surge: Inside the Rise of Daily Income ETFs

SEATTLE, Jan. 13, 2026 – In a market crowded with investment products, ETF platform TappAlpha has achieved a breakout success story. The firm announced today that it has surpassed $250 million in assets under management (AUM), a staggering 150% increase from the $100 million mark it crossed just three months ago. This rapid influx of capital is being driven by intense investor and advisor demand for a new breed of actively managed funds that promise a coveted combination: equity market growth and a steady stream of high-yield income.

At the heart of this growth are TappAlpha’s flagship products, TSPY and TDAQ, which provide exposure to the S&P 500 and Nasdaq-100, respectively. What sets them apart is their use of a sophisticated and aggressive options strategy involving daily covered calls with zero days to expiration (0DTE). The firm’s meteoric rise highlights a significant appetite for innovative yield-generating solutions, but it also casts a spotlight on the complexities and risks inherent in these cutting-edge financial instruments.

“We’re grateful for the trust investors and advisors have placed in TappAlpha,” said Si Katara, Founder and CEO, in a statement. “Surpassing $250 million in AUM reflects a clear appetite for a new approach to tax-efficient growth + income—one that’s simple, transparent, and built for modern portfolios.”

Decoding the 'Growth + Income' Engine

TappAlpha, founded in 2023, has set out to define what it calls the “Growth + Income” investing category. Its approach is to build upon the market’s most trusted benchmarks with a rules-based income overlay. The strategy is designed for investors who want to remain invested in equities for long-term growth but also require a consistent income stream from their portfolios.

Launched in August 2024, the TappAlpha SPY Growth & Daily Income ETF (Nasdaq: TSPY) forms the bedrock of this strategy. The fund holds long exposure to the S&P 500, primarily through the SPDR S&P 500 ETF Trust (SPY). On top of this core holding, it actively writes out-of-the-money (OTM) covered call options on a daily basis. These options have zero days to expiration, meaning they are sold and expire on the same day. The premiums collected from selling these options are designed to generate a consistent monthly income distribution for shareholders, which has reportedly reached an annualized yield between 13-14%.

Its sibling fund, the TappAlpha Innovation 100 Growth & Daily Income ETF (Cboe: TDAQ), launched in September 2025, applies the identical income engine to the tech-heavy Nasdaq-100 index. It allows investors to participate in the growth potential of the technology sector while seeking a similar income benefit.

TappAlpha emphasizes that its process is not a simple, passive overlay. The firm touts its “fintech-powered” active management, which leverages cloud-based automation and data analysis to select optimal strike prices for the daily options. This technology-driven approach aims to efficiently balance the dual goals of generating income and preserving as much of the underlying index’s upside potential as possible.

The Market's Hunger for Yield

TappAlpha’s rapid AUM growth did not happen in a vacuum. The period from October 2025 to January 2026 saw robust, if occasionally volatile, performance in U.S. equities. The S&P 500 rallied to all-time highs, providing a favorable tailwind for funds like TSPY. This strong market performance created an ideal environment for a strategy that harvests income from options premiums, which can be more substantial when market volatility and investor activity are present.

More importantly, the firm has tapped into a deep-seated demand for high-yield products. In an environment where traditional income sources like bonds have faced challenges, investors and their advisors are increasingly looking for alternatives. The yields offered by TappAlpha's funds are a powerful magnet, especially for those in or nearing retirement.

The competitive landscape for income-generating ETFs is fierce, with established players like the JEPI and XYLD funds commanding billions in assets. However, TappAlpha has carved out a distinct niche with its daily 0DTE strategy. While many competitors write options on a monthly or weekly basis, TappAlpha's daily frequency allows for more dynamic adjustments and potentially higher income generation by capturing the rapid time decay characteristic of 0DTE options. This key differentiator appears to be the driving force behind its impressive product-market fit.

A Critical Look at the Risks

While the high yields are attractive, the strategy powering TappAlpha’s ETFs is complex and carries significant risks that require careful consideration. The primary trade-off of any covered call strategy is a cap on upside potential. By selling a call option, the fund agrees to sell its underlying asset at a predetermined strike price. If the market rallies sharply past that price, the fund forgoes any gains beyond that point. In a strong bull market, this can lead to significant underperformance compared to simply holding the underlying index.

The use of 0DTE options introduces another layer of complexity. These instruments are highly sensitive to sudden, intraday price movements. A sharp market swing can dramatically alter the outcome of a trade, and the short time frame leaves little room for error. Furthermore, as noted in the funds' own disclosures, 0DTE options can suffer from lower liquidity and wider bid-ask spreads compared to longer-dated options. This can increase transaction costs and negatively impact the fund's returns over time.

Investors must also be aware that the funds are classified as “non-diversified,” meaning they can concentrate their investments in a smaller number of holdings, potentially increasing risk. The active, daily trading nature of the strategy also leads to high portfolio turnover, which can have tax implications and further increase operational costs.

Expanding the Playbook: Leverage and the Future

Not content to rest on its initial success, TappAlpha is already expanding its product suite into more aggressive territory. A recent partnership with Tuttle Capital Management, a firm known for its leveraged ETFs, has resulted in the launch of the T² Lift™ Series. These new funds, TSYX and TDAX, offer approximately 30% more daily exposure (1.3x) to the performance of TSPY and TDAQ, respectively.

This move is designed to appeal to more sophisticated investors with a higher risk tolerance who are seeking amplified returns on both the growth and income components of the strategy. While this expansion demonstrates TappAlpha’s ambition, it also significantly elevates the risk profile. The use of leverage magnifies both gains and losses. As prospectus documents for the leveraged products warn, a significant single-day drop in the underlying fund could result in a catastrophic loss of principal for an investor in the leveraged version.

This strategic evolution signals TappAlpha’s intent to build a comprehensive platform catering to a wide spectrum of risk appetites. As the firm continues its rapid growth trajectory, investors and advisors will be watching closely to see if its innovative, high-wire act can continue to deliver on its promise of balancing growth and income in an ever-changing market.