Dragons Eye Prospectus
September 21, 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%.
Income Generation
SPLG will be used to generate income through the execution of both PUT and CALL contracts. Typically the timeline framework will be aimed at a 4 month rolling cycle with any further month options being used only in the case of emergency, or taking advantage of opportunity. SPLG is an ETF that reflects the performance of the S&P 500. This ETF has been chosen rather than SPX or SPY because the price of SPLG allows smaller increments of investment. SPX and SPY have prices that are too large to wield in an account with smaller amounts of capital.
Expiry Month Example
Here is an example of how the options will be sold in a given month.
| January 16, 2026 | |||||||
|---|---|---|---|---|---|---|---|
| Short Put Options (Bullish, similar to buying stock) | |||||||
| QTY | Strike | ▲ | Price | Premium | BPE | Extrinsic | ITM Risk |
| 8 | 76 | 0.32 | $1.60 | $1,274 | -$7561 | $1.62 | 35.1% |
| 8 | 78 | 0.43 | $2.10 | $1,674 | -$9161 | $2.10 | 44.6% |
| 4 | 80 | 0.57 | $2.95 | $1,177 | -$4700 | $1.25 | 56.9% |
| Short Call Options (Bearish, similar to shorting stock) | |||||||
| QTY | Strike | ▼ | Price | Premium | BPE | Extrinsic | ITM Risk |
| 2 | 82 | 0.30 | $0.95 | $188 | -$1610 | $0.95 | 28.2% |
| 4 | 83 | 0.23 | $0.65 | $257 | -$3134 | $0.65 | 21.5% |
The table is an example of an entire month of options being sold to create “premium” which is the initial income component. The end result that this premium ends up being actual income kept has to wait until the expiry date of the contracts, or an event prior to expiry which moves the manager to close the contract early for any reason.
In this expiration cycle, a total of $4,570 has been collected at the time of sale. It is very likely that some of that premium will have to be paid to later buy back those contracts, but at a reduced price.
For an extended explanation of each detail in the table, follow: FULL EXPIRY CYCLE EXPLANATION.
Rolling and Repeating
Every 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 months. As there is no way to predict which way the S&P500 will go on a short term basis, we just have to wait patiently and base our reactions by what happens.
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 SPLG. 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 component 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 monthly on performance compared to funds like the following which were touted as the top 7 Income ETFs to buy in 2025. Early numbers will not be as accurate as a longer term time frame, but I will benchmark the performance against the other funds 1month returns, and 12 month returns for comparison. 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
SDY – SPDR S&P Dividend ETF
VYM – Vanguard High Dividend Yield 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
First Report
The very first report can be expected around November 5th. This will allow the month of October to have passed, and analytical data to be prepared both for the “Top 7” and for the “Dragons Eye”.
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.
Dragons Eye Moves
Dragons Eye Moves Newest moves are on top, older moves and setup are lower down the timeline. Sep 23rd, 2025 In the early morning, I wanted to add some pieces I like to think of as “Insurance” to offset the positions held. These are SHORT CALLS which are considered BEARISH positions against SPLG. Taking a …
<a href="https://www.optionslinky.com/dragons-eye-moves/"
Dragons Eye
Dragons Eye Strategy Welcome to the landing page for the Dragons Eye Strategy. This is a project aimed at creating an income fund with the extra power of connecting some S&P500 performance. Here you can find links to the prospectus, explanations, and also a post explaining each move made with some commentary on it’s intentions …
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Expiry Cycle Explanation
Expiry Cycle Explanation September 21, 2025 This post explains in detail the important components of the setup, and activity around an expiry cycle and it’s related figures. Edit January 16, 2026 Short Put Options (Bullish, similar to buying stock) QTY Strike ▲ Price Premium BPE Extrinsic ITM Risk 8 76 0.32 $1.60 $1,274 -$7561 $1.62 …
<a href="https://www.optionslinky.com/expiry-cycle-explanation/"