Leveraging NVIDIA's AI Momentum with NVII: A Covered Call Play on Post-Earnings Volatility

The AI revolution is fueling unprecedented demand for NVIDIA's (NVDA) graphics processing units (GPUs), positioning the company at the heart of a trillion-dollar market. Yet, even for this tech titan, volatility is inevitable—especially around earnings. Enter the REX NVDA Growth & Income ETF (NVII), a new tool designed to capture NVIDIA's upside while mitigating downside risk through a covered call strategy timed to capitalize on post-earnings swings. For investors willing to embrace this high-octane strategy, now is the moment to act.

The NVII Playbook: Covered Calls Meet Leveraged Exposure

NVII's dual mandate is bold: it seeks to deliver weekly distributions through covered call writing while targeting 105%–150% daily leverage to NVIDIA's stock performance. Here's how it works:
- Half the portfolio sells call options on NVIDIA, locking in premium income for distributions.
- The other half retains uncapped upside exposure to NVDA's price swings.

This structure creates a risk-managed bet on NVIDIA's growth. The Treasury bills (comprising over 100% of holdings as of May 27, 2025) serve as collateral for derivatives trades, while options expiring in June 2025 (like the June 20 135.5 call) align with NVIDIA's Q1 FY2026 earnings, due May 21, 2025 (inferred date). This timing is critical.

Why NVIDIA's Earnings Are a Catalyst

NVIDIA's May earnings report will reveal its progress in AI infrastructure, gaming, and automotive markets. Historically, its quarterly results have sparked volatility:
- In 2023, NVDA shares surged 15% post-earnings on AI demand but corrected sharply as macroeconomic fears resurfaced.
- In 2024, the stock fell 10% initially but rebounded within days as investors focused on long-term AI trends.

NVII's covered calls could capitalize on this turbulence. If NVDA rises past the sold call strike price (e.g., $135.50), the fund retains leveraged upside. If it falls, the premium income cushions losses. The key is that post-earnings swings—whether up or down—create opportunities for income and upside participation.

The Risk-Reward Equation: A Sophisticated Investor's Edge

NVII is not for the faint-hearted. Its risks include:
1. Leverage Compounding: Daily rebalancing means returns diverge from NVDA over time. A flat stock over two days could still yield losses.
2. Return of Capital (ROC): Distributions are 100% ROC initially, eroding NAV.
3. Options Exposure: Mispriced options or sudden volatility could amplify losses.

Yet, the rewards are compelling:
- Weekly Income: A rare feature in single-stock ETFs, offering cash flow in a low-yield world.
- AI Tailwinds: NVIDIA's data center revenue hit $39.1 billion in Q1 FY2026, up 73% YoY. Its AI supercomputers (e.g., Blackwell) are selling at a blistering pace.
- Volatility Premium: Selling calls around earnings captures fear-driven premiums, boosting yields.

Timing Is Everything

The fund's June-expiring options and Treasury-heavy positioning suggest it's primed for the May 21 earnings event. Investors who buy NVII now can:
- Lock in premiums ahead of the report.
- Ride the AI wave with leveraged exposure to NVIDIA's AI-driven growth.
- Mitigate downside with income from sold calls.

The Bottom Line: Act Now or Miss the Momentum

NVII offers a unique leveraged play on NVIDIA's AI dominance, structured to profit from both earnings volatility and long-term growth. While risks are high, the rewards—weekly income plus upside exposure—make it a must-consider for aggressive investors. With NVIDIA's stock at $325 (as of May 2025) and AI adoption accelerating, the window to capitalize is narrow.

Act before the earnings wave hits. The next few weeks could define whether NVII's strategy becomes a winner—or a cautionary tale. The data favors action.