Dragons Eye 2026
December 2025
The following is a simplified fund prospectus. The roadmap if you will of the strategy behind the Dragons Eye. Several supporting articles will help explain the why, when, what and how of what happens, but this document serves as the overall view in short form of the plans, methods, and means to an end.
This summary is just an introduction, any investment decision should be based on a review of the entire strategy, and investors could lose some capital with any investment where stocks and options are used.
Objective: This fund is aimed at both capital appreciation and income generation through a combination of instruments that aim to use cash more efficiently, and option selling as a substitute for purchasing stocks or ETFs.
Target Audience: This type of fund should be considered by those who look to have an income focused investment that involves some decisions and management on their part. This is not a “hands off” approach, and neither is it a “day trading” or “swing trading” type of model. One should expect monthly involvement, or in the event of significant moves in the market, some interventions to manage the allocation of capital. The risk tolerance for this level of investment is Medium.
This is not a fund open to the public to invest in. It is merely an educational model based on a real world experiment that will be carried out live and as it happens. Following the pattern of this fund will involve some risk, and one should “paper trade” it unless they have come to learn enough about options to be able to perform these transactions with a live account.
Cash Efficiency
SGOV will be used to hold cash. This is a daily appreciating ETF that invests in short term US Government bonds. Generally it will yield an interest rate similar to the 0-3month bond yield. Currently this is approximately 4%.
SPYI will also be used to hold cash. This holding however is not meant to be used as a fluid cash holding. This is more of an “in case of emergency, break glass” type of holding. Over time, SPYI shares will be added as a parallel investment to the core SPY options trading.
Income Generation
SPY will be used to generate income through the execution of selling both PUT and CALL contracts.
Timeline – There will be two timelines happening at once. The larger picture is a 4 month timeframe. Options are sold at about 120 days out, and then they are left to decay as time goes on. This will be referred to as the “Long Slinky” because of it’s longer dated options.
Another subset of options will be sold using a 4 week rotating cycle (slinky) designed to be in tune with what’s happening “now” versus predicting the long term direction of the SPY or S&P500 components.
When a short option within the mini-slinky will bump into a date where there is already an option being held short, we then will look out farther into the future at 120 days or so to transfer this position from the short slinky to the long slinky. Naturally, that option that is 4 weeks out is immediately because of time, becoming part of the short slinky.
This is a cycle that will repeat every week, and in weeks where a short, or mini-slinky expiring option looks to be rolled into a date where there are already sufficient options, the shift will takee place.
Rolling and Repeating
Every week / month as the expiry date approaches, options that are expiring will be examined to see if it’s necessary, or advantageous to “roll” them to future weeks or months.
Accepting Assignments
It is possible that from time to time the fund might have to, or choose to accept assignment of a short put option. Since that is the equivalent of simply buying stock, it is nothing to fear. Sometimes taking assignment can result in an advantage for the next monthly cycle. In the event that an assignment is accepted, and cash is needed to make the purchase, some SGOV shares will be sold to avail the fund of the cash needed. Should the purchased shares later be sold again, then any excess cash can be put back in to SGOV as desired.
Reinvestment of Premiums
Since the fund is going to constantly be generating premium, there will be cash on hand that can either be left as cash, or it can be converted into SGOV, or individual units of SPYI. Both are viable options and can be considered as time passes by, and conditions dictate the direction of the fund. Generally the focus should be on keeping the SGOV and SPYI components at or above 90% to emphasize the importance on the minimum base cash flow of the fund that comes from daily interest.
Expectations and Benchmarking
The expectation of this fund is that it should behave similar to funds managed by professionals. If the S&P500 underperforms in the short term, it will negatively affect the performance of this strategy, but will also provide opportunity in it’s infancy as the future premiums will benefit from a stagnant period to begin with.
I intend to report quarterly in 2026 on performance compared to funds like the following which were touted as the top 7 Income ETFs to buy in 2025. When considering return it will be a combined net worth of what has been paid in dividends or premiums, and the net asset value of the stock/ETF. I have linked each of these to Yahoo Finance where they can be analyzed. The simple chart data at yahoo doesn’t consider total return including dividends, but the think I like about yahoo finance’s summaries is that you can quickly see the “Yield” figure, and it’s pretty close. You have to also consider the chart to see if the asset has been declining in value, and if that’s the case, then you’re basically paying your own dividends.
SCHD – Schwab U.S. Dividend Equity
SPYI – SPYI S&P
JEPI – JEPI Income Fund ETF
DGRW – WisdomTree U.S. Quality Dividend Growth Fund
NOBL – ProShares S&P 500 Dividend Aristocrats ETF
VIG – Vanguard Dividend Appreciation ETF
FDL – First Trust Morningstar Dividend Leaders Index Fund
Reports
The reports can be expected a week or so after the end of the Quarter.
Moves Along The Way
If you would like to follow the moves made along the way, just come back to this page, and check the menu for “Dragons Eye” and it will lead you first to a landing page, and then the bottom of the page will have a scrollable set of links to find the article you want to find.
Milestone Dec31 101 days into this strategy, and now it’s the end of the year. The strategy has ultimately performed a little better than I had anticipated, and has offered me some learning opportunities that I enjoyed. First let’s get right to the performance measure. The time period was just a little more than a …
<a href="https://www.optionslinky.com/milestone-dec31/"
Dragons Eye
Dragons Eye ’26 This strategy focuses on a very heavy base that is as steady as it gets with a guaranteed interest rate on the account balance while still be able to use all of that balance for investing in other options. Part of it is comparable to what is known as an “iron butterfly” …
<a href="https://www.optionslinky.com/dragons-eye-2/"
Milestone Oct31
Milestone Oct31 40 days into this strategy, and this milestone is taking some measurements at the end of the month, October 31st. A few things have taken place, one completely expected, and the others, more significant, and somewhat unexpected. SGOV – The cash alternative First of all, the body of the dragon, the slow and …
<a href="https://www.optionslinky.com/milestone-oct31/"