7 Best Covered Call ETFs in 2025

Covered call ETFs have quickly grown in popularity as investors search for ways to boost yield in uncertain markets.

These funds package options strategies into the exchange-traded fund (ETF) format, giving everyday investors access to a tactic once reserved for more advanced traders.

The rise in covered call ETFs became especially noticeable after the 2022 bear market, when these funds outperformed broader equity benchmarks due to their ability to capitalize on elevated market volatility.

Investors were drawn to their high-income potential, often yielding far more than traditional dividend ETFs.

But this isn’t a free lunch. Like most derivatives-based strategies, covered call ETFs come with trade-offs and added complexity.

They can cap upside potential, behave differently in various market environments, and aren't always easy to compare due to differences in how they implement their strategy.

That’s why it’s important to understand how they work and whether they fit your portfolio before investing.

Global X Nasdaq 100 Covered Call ETF

The Global X Nasdaq 100 Covered Call ETF (NASDAQ:QYLD) is the more aggressive cousin to the previous ETF, using the same strategy but with different underlying holdings.

It tracks the CBOE Nasdaq-100 BuyWrite V2 index and holds all the stocks in the Nasdaq-100. Like the Global X S&P 500 Covered Call ETF, it sells one-month at-the-money calls on 100% of its portfolio, and charges the same 0.60% expense ratio.

Because the Nasdaq-100 is more volatile, dominated by tech and growth stocks, this ETF collects larger option premiums. That’s why its distribution rate has been higher, at 14.33% as of May 8, 2025. But just like the other ETF, its upside is capped. The ATM strike means that gains beyond the call option are forfeited each month.

Over the last 10 years, this ETF has returned 7.88% annualized with reinvested distributions. The higher yield may appeal to income-focused investors, but the trade-off is limited capital appreciation.

JPMorgan Equity Premium Income ETF

The JPMorgan Equity Premium Income ETF (NYSEMKT:JEPI) is the largest covered call ETF on the market, with more than $39 billion in assets under management.

Unlike the previous two ETFs discussed here, which follow a strict index approach, this ETF is actively managed and takes a more nuanced approach to generating income.

It starts with a portfolio of defensive, low-volatility stocks, aiming to reduce downside risk.

But it doesn’t write covered calls directly on these stocks. Instead, it allocates about 15% of its portfolio to equity-linked notes (ELNs), which are custom over-the-counter structured products that mimic the return profile of one-month, out-of-the-money (OTM) covered calls on the S&P 500.

This approach allows this ETF to collect options premium while preserving some upside, which helps explain its stronger total returns. Over the last three years, it delivered a 7.36% annualized return, compared to just 3.81% for the Global X S&P 500 Covered Call ETF.

The fund currently yields 11.03% based on its 30-day SEC yield and charges a low 0.35% expense ratio. However, its structure comes with two key drawbacks.

First, ELNs are not tax-efficient because they typically generate ordinary income, which is taxed at a higher rate than qualified dividends.

Second, because ELNs are over-the-counter contracts, they carry counterparty risk. You’re relying on the issuing bank to make good on the payout.

NEOS S&P 500 High Income ETF

The NEOS S&P 500 High Income ETF (NYSEMKT:SPYI) is a newer entrant in the covered call ETF space with a unique hybrid approach. It passively holds S&P 500 stocks as its equity base but actively manages the options overlay, buying and selling S&P 500 index options (SPX).

This structure gives this ETF two key tax advantages. First, SPX index options fall under Section 1256 of the tax code, meaning that gains are taxed on a 60/40 split -- 60% long-term, 40% short-term -- regardless of holding period, often resulting in a lower effective tax rate.

Second, because of how the fund manages its options and capital gains, a significant portion of its 12.11% distribution yield is classified as return of capital, which is tax-efficient since it reduces your cost basis instead of generating immediate taxable income.

While it carries a slightly higher 0.68% expense ratio, the fund’s performance since its August 2022 inception has been strong. It delivered a 31.52% cumulative return, outpacing the CBOE S&P 500 BuyWrite Monthly Index, which returned 25.65% over the same period.

This ETF may appeal to investors who are looking for tax-smart high income without giving up entirely on growth potential and who are comfortable with a newer fund.

NEOS Nasdaq-100 High Income ETF

This covered call ETF passively holds stocks from the Nasdaq-100, allowing for tax-loss-harvesting opportunities, while actively managing an options overlay using NDX index options, which, like SPX, are Section 1256 contracts.

Given the higher volatility of the Nasdaq-100, the NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI) is able to generate larger option premiums, which explains its elevated 13.92% distribution rate.

Like the NEOS S&P 500 High Income ETF, a meaningful portion of those distributions is classified as return of capital, which can help defer taxes by reducing cost basis instead of triggering immediate income tax.

The fund charges a 0.68% expense ratio, and although it’s newer -- launched on Jan. 30, 2024 -- it’s already showing strong results.

Since inception, it has delivered a 14.08% cumulative return, outperforming the CBOE Nasdaq-100 BuyWrite Monthly Index, which returned 12.19% over the same period.

Amplify CWP Enhanced Dividend Income ETF

The Amplify CWP Enhanced Dividend Income ETF (NYSEMKT:DIVO) takes a more selective and tactical approach to covered call investing. It starts with a concentrated, actively managed portfolio of 25 to 30 high-quality, large-cap U.S. stocks.

The fund’s managers screen for companies with strong dividends, consistent earnings and cash flow growth, high return on equity, and a solid management track record, spanning most sectors for diversification.

Where DIVO stands out is its flexible options overlay. Instead of selling index calls or writing on the entire portfolio, the fund’s managers tactically write call options on individual stocks.

They choose the timing, strike prices, and coverage ratios based on market conditions and stock-specific outlooks. This allows for more control over the balance between income and capital appreciation.

As a result, DIVO offers a lower distribution yield of 4.76%, but superior long-term total returns. Over the past five years, it has returned 13.28% annualized, outperforming the CBOE S&P 500 BuyWrite Index’s 10.32% during the same period.

The expense ratio is 0.56%, which is reasonable for an actively managed covered call ETF with selective stock picking and tactical option execution.

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