DayMAX™ ETFs: A year of 0DTE and capturing Overnight Returns

Hamilton ETFs

By Hamilton ETFs

(Sponsor Blog)

A little over a year ago, we unveiled Canada’s first suite of daily covered call ETFs, made possible by the evolution of the options market and emergence of options that expire every trading day. The innovative and carefully crafted DayMAX™line-up created a new category in the Canadian ETF market, offering a differentiated approach to generating income. One year later, we’re excited to share the results and demonstrate the strategy’s potential.

What are the DayMAX™ ETFs?

Our first three DayMAX™ ETFs consist of two separate holdings — one providing the core equity exposure and the other providing the underlying for the daily options strategy:

  • The core exposure is a HAMILTON CHAMPIONS™ ETF, specifically, CMVP (Canadian Equity), SMVP (U.S. Equity) or QMVP (Technology), which holds blue-chip stocks and participates 100% in market movements.
  • A low-cost index fund with healthy options liquidity, like VOO.US or QQQ.US, on which we execute the zero-days-to-expiry (0DTE) options strategy.

Unlike traditional covered call ETFs that use monthly call options and generate income 12 times a year, the DayMAX™ ETFs seek to generate higher and more frequent tax-efficient income from writing call options that expire daily. By selling options in the morning that expire at the market close, the ETFs remain fully exposed to any market movements that occur after trading hours. They also employ modest 25% leverage, intended to enhance overall growth and income potential and help mitigate the yield/return trade-off inherent in covered call strategies.

A year later, these DayMAX™ ETFs have raised a combined $1.3 billion in assets under management (AUM)[1]. Here they are with their respective yields and total returns as of August 31, 2026:

Fund 1 Year Since Inception* Yield[2]
Hamilton Enhanced Canadian Equity DayMAX™ ETF (CDAY) 32.5% 33.0% 18.52%
Hamilton Enhanced U.S. Equity DayMAX™ ETF (SDAY) 19.9% 20.1% 18.45%
Hamilton Enhanced Technology DayMAX™ ETF (QDAY) 42.0% 40.4% 19.33%

*Annualized

“It’s encouraging first-year evidence that the strategy is performing as intended,” says Nick Piquard, Chief Options Strategist at Hamilton ETFs. “It’s unique, and we believe we’ve hit the right balance between generating high yield and maintaining a high-quality underlying portfolio. We have successfully married our HAMILTON CHAMPIONS™ ETFs with daily covered calls written on a smaller, modestly leveraged exposure. The leverage is designed to offset the upside we’re giving up on those daily options, and so far, it has done that well.”

DayMAX™ One Year In: Comparisons

Below, we compare how a $100,000 investment in each of the DayMAX™ ETFs performed since inception against relevant indices on a total return basis. As you can see, CDAY and QDAY have outperformed the S&P/TSX 60 and Nasdaq-100, respectively, while SDAY has closely tracked the S&P 500.

This is particularly noteworthy given that covered call ETFs tend to lag traditional equity ETFs in bull markets, as they give up some upside potential in exchange for generating income. Over the period shown, the DayMAX™ ETFs portfolio construction, use of modest leverage and daily options strategy helped mitigate this trade-off and even deliver higher total returns in some cases.

Canadian Equities: CDAY vs. S&P/TSX 60 Index[3]


U.S. Equities: SDAY vs. S&P 500 Index[4]

 

Technology: QDAY vs. Nasdaq-100 Index[5]

The DayMAX™ Advantage: What makes the Suite Unique?

The first three DayMAX™ ETFs have delivered strong returns and distributions in their first year. Let’s examine the key design decisions behind the strategy:

Daily options trading

Options trading is the basis of any covered call strategy. Investors sell call options in exchange for cash premiums at the expense of some potential upside. Usually, the call options employed in covered call ETFs expire in a month, but in recent years, same day options or “0DTE” options became possible. These daily options contracts now represent over 60% of all S&P 500 index options volume on a typical day, underscoring both their rapid adoption and deep liquidity[6].

At Hamilton ETFs, we recognized the potential this development held for investors. With options expiring every day of the week, an ETF can generate income daily by monetizing intraday volatility.  While the premium on an individual 0DTE option is lower than that of a one-month option, the key difference lies in the trading frequency: monthly strategies sell options 12 times per year, while 0DTE options can be written ~250 times annually. This should translate into higher total premiums and enable us to pay distributions out to investors more frequently — in the DayMAX™ case, twice a month.

It’s important to add that while daily options contracts are a way of monetizing volatility more frequently, they aren’t always a superior strategy.

“There are different scenarios where one does better than the other. If markets are moving a lot on a day-to-day basis but not on a month-to-month basis, then you’re likely better off with a monthly contract,” says Piquard. “On the other hand, if markets are moving steadily, with only smaller daily movements, you’ll probably be better off with a daily options strategy.”

For that reason, we believe DayMAX™ ETFs may complement longer-duration covered call strategies such as our YIELD MAXIMIZER™ ETFs. By combining daily and monthly covered call strategies, income investors can diversify across time horizons, helping to smooth cash flows and tap into a wider range of income opportunities. In essence, DayMAX™ adds another tool to your income toolkit, enhancing flexibility and supporting more frequent income generation.

100% overnight participation

When designing our DayMAX™ line-up, we chose to sell call options in the morning that expire at the end of that same trading day. While 25% of the overall portfolio remains covered during the trading day, limiting the upside on that portion, the full portfolio (i.e., 125% of the ETF’s net asset value) is exposed to market moves outside of regular trading hours. This can make a dramatic difference to long-term returns given that historically the majority of gains happen overnight. (See also: Unlocking Overnight Returns for Covered Call ETFs)

Overnight Returns vs. Intraday Returns — S&P 500 Index[7]


 

A high-quality portfolio

It takes a lot more than skillful and diligent options trading to make a covered call ETF successful long-term. We designed CDAY, SDAY, and QDAY to have high-quality underlying portfolios that reflect strong fundamentals and diversification. They each hold a HAMILTON CHAMPIONS™ ETF that provides exposure to blue-chip stocks with demonstrated track records in terms of dividends or profitability and forms the foundation for the strategy.

The DayMAX™ suite reflects the innovative spirit, careful consideration and rigorous testing behind everything we do, and we’re optimistic this novel approach will provide many investors with long-term sustainable cashflows.

Key Benefits of the DayMAX Suite:

  • Daily call options for higher income: Premiums generated every day
  • More frequent payouts: Distributions twice a month
  • Full overnight market exposure: The portfolio remains fully exposed to overnight market movements, including both gains and losses.
  • High-quality stocks: A diversified, blue-chip underlying portfolio
  • Enhanced structure: Modest leverage for higher income and growth potential
  • Options expertise: A team with combined experience of 60+ years to execute strategies

 

Trivia

JPMorgan commodities research team recently said “… we don’t have a baseline view. We simply don’t know how to model the endgame.”² What has the analysts stumped?

Hint: It’s driving stocks in our EMAX ETF this year. 

Answer: Oil prices.

The S&P 500 Index and the S&P/TSX 60 Index (“Indices”) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Hamilton ETFs © 2026 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein.

Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and does not take into account sales, redemptions, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Only the returns for periods of one year or greater are annualized returns. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.

Certain statements contained in this note may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.

[1] As of September 21, 2026. Source: Bloomberg Terminal

[2] Yield is an estimate of the annualized yield an investor would receive if the most recent distribution remained unchanged for the next 12 months, stated as a percentage of the price per unit on August 31, 2026. The yield calculation excludes any additional year end distributions and does not include reinvested distributions.

[3] July 14, 2025, to August 31, 2026. Source: Bloomberg. The graph illustrates the impact to an initial investment of $100,000. It is not intended to reflect future returns on investments in CDAY. The index performance returns are for illustrative purposes only, and the returns do not reflect any management fees, transaction costs or expenses. Investors cannot invest directly in an index.

[4] July 14, 2025, to August 31, 2026. Source: Bloomberg. The graph illustrates the impact to an initial investment of $100,000. It is not intended to reflect future returns on investments in SDAY. The index performance returns are for illustrative purposes only, and the returns do not reflect any management fees, transaction costs or expenses. Investors cannot invest directly in an index.

[5] July 14, 2025, to August 31, 2026. Source: Bloomberg. The graph illustrates the impact to an initial investment of $100,000. It is not intended to reflect future returns on investments in QDAY. The index performance returns are for illustrative purposes only, and the returns do not reflect any management fees, transaction costs or expenses. Investors cannot invest directly in an index.

[6] Source: Cboe, August 5, 2026

[7] Source: Bloomberg, S&P Global, Hamilton ETFs. Past performance is not indicative of future results. Overnight vs. intraday returns may differ materially in future periods. Source: S&P Global, Bloomberg, Hamilton ETFs. Data from Jan 1, 2000, to August 31, 2026. The graph illustrates the growth of an initial investment of $100 in the SPDR S&P 500 ETF Trust (SPY), the SPDR S&P 500 ETF Trust (SPY) overnight, and the SPDR S&P 500 ETF Trust (SPY) intraday with annual compounded total returns. The graph is for illustrative purposes only and intended to demonstrate the historical impact of the indexes compound growth rate during intraday and overnight sessions. It is not a projection of future index performance, nor does it reflect potential returns on investments in the ETF. Investors cannot directly invest in the index. All performance data assumes reinvestment of distributions and excludes management fees, transaction costs, and other expenses which would have impacted an investor’s returns.

 

What Successful Investing and The Great Gretzky have In common

Image courtesy Outcome/Shutterstock

By Noah Solomon,

Special to Financial Independence Hub

It’s been a long

A long time comin’, but I know

A change gon’ come

Oh yes, it will  

  • A Change Is Gonna Come, by Sam Cooke

Skate where the Puck is Going, not where it’s Been

Nicknamed “the Great One,” Wayne Gretzky has been called the best hockey player ever. Despite Gretzky’s unimpressive size and strength, his intelligence, stamina, and reading of the game were unrivaled. Gretzky himself credited much of his success to advice he received from his father as a young boy, which was to “skate where the puck’s going, not where it’s been.”

As is the case with the Great One, superior investment results stem in large part from anticipating future developments rather than simply positioning portfolios based on the past or current environment. To be clear, I am not referring to market timing, nor am I referring to predicting earnings, economic growth, inflation, or interest rates over the next quarter or year. As stated in past newsletters, such endeavours are highly unlikely to result in outperformance.

Rather, I am referring to significant changes in the investment landscape that (1) will likely persist for the next several years and (2) present both the risk of significant underperformance and the opportunity for material outperformance, depending on how one’s portfolio is positioned.

The most Powerful Force in Markets

Reversion to the mean is perhaps the most powerful force in markets: periods of higher-than-normal returns have been followed by periods of subpar returns, and vice versa. The postwar expansion and steady market gains of the late 1940s and 1950s were followed by stagflation and choppy, flat returns in the 1960s and 1970s. In similar fashion, the great bull run of the 1980s and 1990s ushered in the lost decade of the 2000s, when stocks delivered negative-to-flat returns.

This pattern is not coincidental but rather is firmly rooted in behavioural economics. For as long as modern markets have existed, people have overreacted, both in good times and bad. Following several years of strong economic and earnings growth, investors have repeatedly become overconfident that the proverbial party will continue indefinitely, causing stock prices to rise at a faster pace than earnings and multiples to reach unsustainable levels. At the other end of the spectrum, during periods of recession when earnings either decelerate or contract, widespread despondency morphs into predictions of eternal darkness with no possibility of improvement, resulting in lower than reasonable earnings expectations, multiple contraction, and fire sale asset prices.

The longer and stronger the expansion, the more irrationally exuberant people become, and the longer and darker the recession, the more illogically pessimism gets entrenched. Ironically, the most optimistic extrapolations reach a crescendo when they are least likely to be realized, and the most pessimistic ones become most widespread when they should be least so. The exact anatomy and causes of different booms and busts change from cycle to cycle, but the overall picture has remained tragically consistent. Plus ça change, plus c’est la même chose.

Markets have NOT been Normal

Investors today have grown accustomed to well-above-average returns. However, as the following table demonstrates, the past ten years have been highly anomalous from a historical standpoint.

Equity Market Returns: A Longer-term Perspective

 

Notwithstanding the daunting historical pattern of mean reversion, the post-global-financial-crisis environment has been highly supportive of equities. Increased globalization, moderate inflation, and low interest rates supported strong earnings growth and expanding valuation multiples, which in turn spurred above-average returns.

In contrast, today’s landscape is marred by trade frictions, stubborn inflation, ballooning sovereign debt levels, and rising interest rates. Importantly, these structural headwinds for earnings growth stand in sharp contrast to today’s elevated valuations, with U.S., Canadian, and European indexes all standing in the top fifth of their historical valuation ranges.

I have no idea whether markets will rise or fall over the near-to-medium term, let alone exactly when or by how much. However, given the historically inverse relationship between starting valuations and forward, ten-year returns, I am confident that average returns over the next ten years will likely be lower than long-term averages, and perhaps meaningfully so. History seems primed to repeat itself, if not rhyme.

Estimating returns requires sophisticated assumptions, and methodologies used to do so vary across asset managers. Yet, despite these differences, a common theme emerges: most asset managers forecast low future equity returns.

Annualized Equity Return Forecasts: Next 10 Years

 

What REALLY drives the Bus

It goes without saying that a portfolio’s individual stock holdings and sector weights are important determinants of its return. However, there is more than meets the eye with respect to performance attribution. Continue Reading…

Understanding Target Cash Flow ETFs: A new approach to Cash Flow Investing

Looking for consistent cash flow without the guesswork? See how Target Cash Flow ETFs are redefining cash flow investing.

Image from Pixabay

By Darim Abdullah, BMO Global Asset Management

(Sponsor Blog)

For many investors, especially those approaching or in retirement, generating consistent cash flow is one of the most important goals in a portfolio. Traditionally, that meant relying on dividends, coupons, or systematic withdrawals. But these sources can fluctuate, making it difficult to plan with confidence.

A newer category of solutions, Target Cash Flow ETFs, has been launched by BMO ETFs to help address this challenge. These strategies shift the focus from simply “earning yield” to delivering a defined cash flow outcome.

What are Target Cash Flow ETFs?

Unlike traditional income funds, where payouts depend on underlying dividends or interest earned, Target Cash Flow ETFs take a more structured approach. They aim to deliver regular monthly distributions based on a predefined annual target (approximately 6% –15% depending on the ETF)1, rather than whatever cash flow the portfolio happens to generate.

This approach aligns with the broader rise of “outcome-oriented” investing where ETFs are built to meet specific investor goals, such as generating cash flow or reducing volatility.

How do they work?

The key difference lies in how distributions are generated.

  • Traditional cash flow ETFs generally pay out what the portfolio earns (dividends, interest, option premiums).
  • Target Cash Flow ETFs aim to pay out a set amount, regardless of market conditions.2

To deliver a more regular monthly cash flow, the distribution is built using a blended funding approach. Cash flow may come from the portfolio’s natural sources of return: dividends, interest, and (where applicable) option premiums, and may also include Return of Capital (ROC). ROC doesn’t create an immediate tax liability, but it does reduce your Adjusted Cost Base (ACB) over time, which can affect taxes when the investment is sold. And if ROC isn’t offset by portfolio growth, it can gradually reduce invested capital.

That’s why it’s important to assess the strategy through a total return lens, not just the cash flow. If the portfolio’s total return stays above the distribution yield, the client’s underlying capital can still grow over time; if it’s persistently below the payout, the likelihood of capital erosion increases.

With the above payout breakdown in mind, it is worth noting that the payout levels for the T series solutions were carefully selected after examining the historical long-term returns of the parent portfolios, with the aim of minimizing the return of an investor’s initial capital as much as possible. Over the long term, the objective is for the distribution levels to be supported by the total returns of the underlying portfolios.

BMO’s Target Cash Flow offering

BMO has been an early innovator in this space in Canada3, introducing Target Cash Flow Units (often referred to as “.T series”) across a broad lineup of ETFs.

These units are available on a range of existing strategies including:

  • Asset allocation ETFs (e.g., all-equity or balanced portfolios)
  • Covered call ETFs (both dividend and sector focused)

Rather than launching entirely new funds, BMO has added a new .T series of units to existing ETFs, giving investors the ability to choose between traditional distributions and a targeted cash flow approach within the same parent strategy. I

Key Features

BMO’s Target Cash Flow Units are designed to offer: Continue Reading…

Retired Money: the 4% Rule, Stock market Risk and the CAPE Ratio on Valuations

Sequence of Returns Risk: Chart by Stefano Starkel

My latest MoneySense Retired Money column touches on a number of blogs that regular readers of Findependence Hub may already have seen, but ties together a few disparate threads that may warrant revisiting. Click on the highlighted headline here for the full article: The CAPE ratio, the 4% rule and retirement anxiety.

The focus is on the 4% Rule, Sequence of Returns Risk early in Retirement, and stock valuations measured by the CAPE Ratio.

The 4% Rule is one of those Personal Finance chestnuts, a topic we explored in Retired Money as recently as late 2025 (here.) My Findependence Hub blog on the 4% Rule appeared late in July here.

Robert Shiller’s CAPE Ratio: the Cyclically Adjusted Price-to-Earnings ratio (CAPE), is a measure of how fairly valued or overvalued stocks may be.   The blog on the CAPE Ratio ran late in August here. Both are under my byline: Each contains full raw quotes from a variety of business owners and investment professionals on both sides of the border, gathered on Linked In and a service called Connectively, formerly Featured.com.

A useful primer on the CAPE Ratio was provided by blogger Michael J. Wiener, on his Michael James on Money blog (from early August), also republished here on Findependence Hub in August. He says the CAPE Ratio is “just the current price divided by the average inflation-adjusted earnings over the past decade.”  Investopedia defines the CAPE Ratio as “a valuation measure that uses real earnings per share over a 10-year period to smooth out fluctuations in corporate profits.” You can find more on CAPE here on Wikipedia.

See also this recent Findependence Hub blog by Stefano Starkel titled the The Alternative to the 4% Rule isn’t a different number: It’s a different mechanism.  There, Starkel argues that “the fragile part of a fixed-withdrawal plan is Sequence-of-Returns risk.” He shows a chart [shown above] that demonstrates how early losses in Retirement can have a dramatically negative impact on returns and thus Retirement income.

Stay Calm

Sure, proper diversification and asset allocation should allow you to Stay Calm, which happens to be the title of a new book published early in September by David Booth: he’s a founder of Dimensional Fund Advisors (DFA), one of the better indexing companies out there. I have finished reading  it and plan to review it for MoneySense in the near future.

The main principles of the DFA approach to investing is to keep costs low by minimizing trading and using passive investing vehicles like ETFs, and above all trust the markets over the long term while avoiding picking individual stocks and attempting to time financial markets.

Tune out the Noise
Continue Reading…

How I bought stocks and left the ETF fees behind

 

By Dale Roberts, Retirement Club/cutthecrapinvesting

Special to Financial Independence Hub

Exchange traded funds (ETFs) are likely the greatest advancement for investorkind. We can gain much-needed diversifcation and keep the fees super low. Compared to traditional actively managed mutual funds, ETFs are usually a 90% to 95% off sale. Over the decades this fee saving can amount to a life-changing event. But what if we go one step further and buy enough stocks to potentially replicate the index? Here’s how I bought stocks and left the ETF fees behind.

As always the following is not advice.

In most cases it might not make sense to sell an ETF to recreate the index. The fees can be next to nothing. An ETF such as XIC-T, which tracks the broad Canadian TSX Composite Index, offers investors an extremely low-cost way to gain diversified exposure to Canadian equities. With a Management Expense Ratio (MER) of just 0.06%, the fees are next to nothing. On a $100,000 portfolio, the annual cost is only $60.

ETF fees are peanuts

On a $500,000 portfolio the fees are just $300 per year. That’s peanuts. If you seek exposure to the broad Canadian stock market in cap-weighted form, XIC-T or similar is likely for you. Cap-weighted means that the largest companies, based on their market capitalization (total market value), receive the greatest weight in the index. For example, Royal Bank of Canada is one of the largest companies on the TSX by market capitalization, so it has one of the largest weights in the index. The larger a company becomes relative to the other companies in the index, the greater its influence on the index’s performance.

Related read: What is index investing?

Of course you can buy the markets for U.S. and International stocks in the same low-fee manner. For portfolio ideas check out the core global ETF portfolio models on Cut The Crap Investing. And as readers likely know, you can purchase an all-in-one global ETF portfolio at various risk levels. See the asset allocation ETF page.

In a recent Sunday Reads we looked at the performance of the core ETF portfolios.

Buying stocks leaving ETF fees behind

Of course, it’s a personal decision whether to buy an index fund or gain exposure to the Canadian market by way of a stock portfolio. The good news? We can keep it simple. Canada’s bluest-of-blue-chip companies have a long history of delivering excellent returns: and often beating the broader market.

Most Canadian self-directed investors build their portfolios around Canadian stocks, then add U.S. and international exposure through ETFs. That’s exactly what I do. And that’s also why you might want to check out Wealth Club for Canadians. It’s a premium service focused on wealth creation, with specific Canadian stock portfolio models designed to help investors build and manage their own portfolios.

In my personal RRSP portfolio I created a version of a Canadian Wide Moat portfolio. It has a blue chip focus, but sticks to the wide moat sectors:

  • Canadian financials
  • Railways
  • Grocers
  • Broader utilities (including pipelines and telcos)

I shared this wide moat (out) performance example on Twitter / X …

Yes, please. Follow me on Twitter.

In my personal RRSP portfolio I held a concentrated portfolio of banks, pipelines and telcos. It’s somewhat close to the Essentials Portfolio that has a nice history of out performance.

Hanging up on the telco sector

In the utilities camp I held BCE-T and Telus T-T. As we know the telco sector fell on hard times. In early 2024 I mostly hung up on the telco sector. The rules changed and higher borrowing costs caused by rate increases piled on.

And while my Canadian banks have performed very well, I thought I should seek exposure to the greater Canadian Financials sector. So, I kept most of RBC-T and bought XFN-T, iShares S&P/TSX Capped Financials Index ETF. The fund mostly holds the big 6 Canadian banks, the insurers and Brookfield BN-T.

I have also been fortunate to hold Canadian oil and gas stocks from about 600% ago. I also hold/held some gold and other inflation-fighting “stuff” such as PRA-T.

The “problem” is, XFN-T has an MER of 0.61%. We are paying $610 on every $100,000. I’m not complaining. The ETF delivered a ‘quick’ 100% or more. RBC had even greater returns for the period. Yes, we’ve all be treated very well by our Canadian financials. They are even trouncing U.S. tech in recent years.

What stocks did I buy to remove ETF fees?

I bought the big 4 Canadian banks: