The T-Bill "Yield Stack": Turning 0.25% into 8-10% Without Adding Risk

If your cash is still lounging in a big-bank savings account at 0.25 %, you're getting robbed.

Yet three-month Treasury bills now hand out about 4.3 %—risk-free.

Getting roughly 4 % more on your cash than the banks pay is the simplest boost to retirement income.

To capture it, I layer two simple moves into what I call the Yield Stack:

1. Base layer – “T-Bill rent.” Park idle cash in a rolling ladder of short-term Treasurys so every dollar works at the government’s rate.

2. Second layer – “Option rent.” Sell 0.25-delta covered calls on dividend blue chips, skimming an extra 3–5 % premium annually.

The result: 8–10 % dependable income with a fraction of the volatility people usually swallow to chase yield. — No special accounts required. No complex trading platforms needed.

See how this approach crushes conventional income strategies:

Let me walk you through this two-part strategy step-by-step, starting with the foundation that makes everything else possible.

Disclaimer: Everything I've shared is simply for educational and informational purposes and should not be considered financial advice. Everyone's financial situation is unique, and what works for one person might be completely wrong for another. Before making any financial moves, it's always wise to consult a qualified financial advisor who is familiar with your specific circumstances.

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Step 1: Make Your Cash Non-Negotiably Productive

The foundation of our stack is bulletproof: U.S. Treasury Bills currently yielding about 4.3 %.

But there's a challenge: How do you maintain liquidity while capturing these rates?

Enter the T-Bill Ladder – the optimal solution for maximizing both yield and accessibility.

Picture a ladder where each rung is a Treasury Bill with a different maturity date.

By staggering 4-week, 8-week, and 13-week T-Bills, you'll create a system where something is always maturing, giving you both liquidity and that sweet 5%+ yield.

The optimal structure is what I call the 3×3 Matrix:

Based on this week’s auction rates, the 3×3 ladder is producing about 4.3 % annualised.

This rotation ensures maximum yield capture while maintaining consistent liquidity.

I had a client with $500 000 in a big-bank account making just $1 250 a year at 0.25 %. After switching to the current 3×3 T-Bill ladder, that same cash now throws off about $21,500 a year—a 17-fold boost with zero added risk.

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Treasury ETFs (For Maximum Simplicity)

While T-Bill ladders offer maximum yield, I recognize that not everyone has the time or inclination to manage individual securities.

Fortunately, there's a nearly-as-effective "set it and forget it" alternative that still captures most of the benefits.

After thoroughly analyzing all 17 available short-term Treasury ETFs, I've identified the three optimal choices for those preferring simplicity over maximum yield:

The beauty here is the state tax exemption.

Unlike bank interest, Treasury interest is exempt from state and local income taxes.

For California residents in the top bracket, this means your 5.25% T-Bill ETF yield is equivalent to a fully taxable 5.95% yield – an automatic 13% performance boost without taking on any additional risk.

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Step 2: The Covered Call Enhancement

Now that we've secured a rock-solid 5%+ foundation, it's time for the truly game-changing part of the strategy: supercharging your yield without significantly increasing your risk.

This is where the "stack" in "Yield Stack" comes into play.

By strategically implementing covered calls on high-quality stocks, we can generate an additional 3-5% yield—pushing our total return to 8-10% annually.

So what exactly is a covered call?

1. You own shares of a stable, high-quality stock

2. You sell someone else the right (but not the obligation) to buy those shares at a specific price by a specific date

3. In exchange, you collect cash upfront, regardless of what happens next

It's like renting out the potential future upside of your stocks in exchange for guaranteed income today.

But the key to success isn't chasing the highest premium—it's selecting the right strike price relative to implied volatility.

The mistake most investors make with covered calls is getting greedy.

They sell options too close to the current price, chasing higher premiums, then watch in dismay as their stocks get called away during every rally.

Instead, follow my 20-30 Delta Rule:

1. Only sell calls with a delta between 0.20-0.30

2. Choose expirations 30-45 days out

3. Only write calls on stocks you'd be comfortable holding for years

This formula creates an optimal balance: meaningful premium income with roughly 70-80% probability your stock won't be called away in each cycle.

Real-world mechanics:

Seeing this strategy in action with real numbers reveals just how powerful it can be. Let's look at a specific example using a stock everyone knows.

Consider Coca-Cola (KO) trading at $71.93.

Using my VADER scan, the optimal covered-call setup looks like this:

This setup generates an immediate $92 per 100 shares, providing a 1.28 % yield in just 40 days.

Repeating that cycle all year works out to an ≈ 11.7 % annualized premium yield; add Coca-Cola’s 2.83 % dividend, and you’re targeting about 14.5 % total income per year if the stock stays roughly flat.

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What I've shared gives you the architectural framework of the Yield Stack.

The following section, available exclusively to Premium subscribers, contains the detailed implementation blueprint—including specific stock selections, exact option parameters, and the complete step-by-step system.

Join Premium to access the complete implementation guide.

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The Ideal Candidates: Top 5 Stocks + Top 3 ETFs for Covered Calls

I ran VADER across 3,200 optionable U.S. stocks; these five companies currently score highest for covered call suitability: