Meet TMGN, the 0.88% Fee ETF Betting on Tech Giants and Options Income

TMGN holds NVIDIA equal-weighted with nine mega-cap AI stocks and sells 0DTE covered calls daily to generate monthly income at a 0.88% fee.

AMD surged 134% year-to-date while Palantir dropped 24%, exposing sharp dispersion risk hiding inside TMGN's equal-weighted basket.

TMGN's 0.88% fee undercuts rival YieldMax's Magnificent 7 fund at 1.34%, but covered-call strategies historically lag in strong bull markets and the fund has no track record.

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A new exchange-traded fund is trying to package the biggest names in artificial intelligence into a single ticker that also pays regular income. Tapp Finance, doing business as TappAlpha, has launched the TappAlpha Cboe Magnificent 10 Growth & Daily Income ETF ( CBOE:TMGN ), which lists on the Cboe BZX Exchange.

TMGN carries a 0.88% management fee, which the prospectus lists as the fund's total annual operating expenses. That works out to $88 a year on a $10,000 investment. It is actively managed, aims for monthly distributions, and holds ten of the largest US tech and growth stocks alongside a daily options-selling strategy meant to generate income.

TMGN is built around the Cboe Magnificent 10 Index, an equal-weighted basket of 10 large-cap, US-listed technology and growth-oriented companies with listed options. According to the prospectus, current members are NVIDIA ( NASDAQ:NVDA ), Microsoft ( NASDAQ:MSFT ), Apple ( NASDAQ:AAPL ), Amazon ( NASDAQ:AMZN ), Alphabet ( NASDAQ:GOOGL ), Meta Platforms ( NASDAQ:META ), Tesla ( NASDAQ:TSLA ), Broadcom ( NASDAQ:AVGO ), AMD ( NASDAQ:AMD ), and Palantir ( NASDAQ:PLTR ). The index is rebalanced monthly and reviewed quarterly. Because every stock starts at roughly equal weight, a smaller name like Palantir carries the same starting weight as NVIDIA.

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The "daily income" piece comes from a covered-call overlay. Each trading day, the fund writes out-of-the-money call options that expire the same day, known on Wall Street as "0DTE" contracts. It collects a premium for each option sold. In the adviser's view, a daily strategy "provides a higher income potential and a more stable income level in volatile markets" than a monthly cycle. The prospectus also allows for weekly options, put spreads, or multi-leg strategies as defensive actions during periods of heightened volatility.

Writing calls caps how much the fund can earn when these stocks rally hard, which is the core trade-off. The prospectus states plainly that the strategy "will limit the Fund's participation in gains" above the strike prices. TMGN is also classified as non-diversified and is currently concentrated in the semiconductor industry, spanning three sectors: Information Technology, Consumer Discretionary, and Communication Services.

TappAlpha's pitch is combining a mega-cap growth basket with steady option premium income. The daily 0DTE mechanic is the differentiator. Direct competitors already exist. YieldMax's Magnificent 7 covered-call fund runs a similar covered-call playbook on the original seven and charges a 1.34% expense ratio, well above TMGN's 0.88%. Roundhill's Magnificent 7 ETF offers plain vanilla exposure without an income overlay at a lower fee, while Defiance's 0DTE income fund runs a similar strategy on the broader Nasdaq-100. TMGN's twist is broader membership, adding AMD and Palantir to the standard seven, wrapped in the daily options mechanic.

TMGN is designed for investors who want mega-cap AI exposure but also want regular income, and who accept a ceiling on upside in exchange for premium collection. Income-focused accounts are the obvious target audience.

Several risks deserve weight. TMGN has no live track record, so there is nothing to judge it by yet. New ETFs often trade with wide bid-ask spreads until assets grow, and small funds sometimes close if they fail to gather assets. Distributions are monthly, not daily, and the prospectus warns that payouts "may include a return of capital" and are not guaranteed in any given month. Covered-call strategies historically lag in strong bull markets. If the basket rips higher, TMGN will trail a straight long position.

The Magnificent 10 has often traded as one AI theme, yet concentration risk is real and dispersion inside the basket is significant. Year-to-date price moves through July 16 illustrate the point: AMD is up 133.91%, Apple 22.81%, Alphabet 13.39%, NVIDIA 11.34%, Broadcom 8.59%, Amazon 8.26%, and Meta 0.85%, while Microsoft is down 16.69%, Tesla down 13.04%, and Palantir down 24.37%. For comparison, the Invesco QQQ Trust ( NASDAQ:QQQ ) is up 14.92% year to date.

Worth watching from here: how quickly TMGN gathers assets, what its first monthly distributions look like once declared, and whether the daily 0DTE overlay holds up its end during the coming earnings weeks for these mega-caps.

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