Market volatility has surged in 2025, especially following April 2, a day the Trump administration dubbed “Liberation Day,” when it announced sweeping tariffs on global trade partners.
As of the market close on April 15, the Cboe Volatility Index (VIX) was up 74% year to date at 30.1. It briefly spiked to 52.3 on April 8 after the White House proposed a 104% tariff on Chinese imports.
The VIX rises when investor uncertainty increases, and it’s calculated based on real-time pricing of S&P 500 index options. It essentially reflects the market’s expectations for volatility over a 30-day period.
[Sign up for stock news with our Invested newsletter.]
However, this elevated volatility does not just affect portfolio values. The silver lining is that options sellers, such as those using buy-write or covered call strategies, can earn higher income.
To do this, you need to own 100 shares of an underlying stock or exchange-traded fund (ETF) with an active options chain. Then you can sell a call option, which gives someone else the right to buy your shares at a set price (the strike price) by a certain date (the expiry).
What you collect upfront for selling that call is called the premium. That amount depends on how far away the strike price is from the current price (called “moneyness”), how much time is left before expiration and, importantly, how volatile the underlying asset is.
“The price you receive for selling a call with the same number of days to expiration is not always the same — it is based in part on the expected future volatility of the underlying stock,” says Justin Zacks, vice president of strategy and spokesperson, North America, at Moomoo, a brokerage platform. “During periods of uncertainty, call sellers may receive higher-than-usual premiums.”
Volatility increases the likelihood that a stock will swing enough to hit or exceed the strike price, which makes the option more valuable. All else being equal, that translates to higher premiums for the seller.
A covered call strategy provides an upside-capped, yield-first return profile that trades capital appreciation for immediate income. Covered call strategies will likely lag in strong bull markets but can shine in choppy, sideways conditions where price appreciation is limited but volatility remains elevated.
And like many complex investing strategies, this one can be outsourced to an ETF. Your role shifts from selling options to simply holding the ETF and collecting its often-monthly income distribution.
“With a covered call ETF, the stock purchase, portfolio management and call writing decisions are left to a professional,” says Robert Johnson, professor of finance at Creighton University’s Heider College of Business. “By buying a covered call ETF, one doesn’t have to continuously monitor both the stock and options markets.”
Here are seven of the best covered call ETFs to buy right now:
| ETF | Expense ratio | Distribution yield |
| JPMorgan Equity Premium Income ETF (ticker: JEPI) | 0.35% | 6.8% |
| JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) | 0.35% | 11.0% |
| Roundhill Small Cap 0DTE Covered Call Strategy ETF (RDTE) | 0.95% | 28.3% |
| Roundhill Bitcoin Covered Call Strategy ETF (YBTC) | 0.95% | 43.1% |
| Amplify CWP Enhanced Dividend Income ETF (DIVO) | 0.56% | 4.9% |
| Amplify CWP International Enhanced Dividend Income ETF (IDVO) | 0.66% | 6.2% |
| iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW) | 0.35% | 13.4% |
JPMorgan Equity Premium Income ETF (JEPI)
JEPI is the $37.7 billion heavyweight in the covered call ETF space and also holds the title of the largest actively managed ETF listed in the U.S. It uses a two-part strategy: investing in low-volatility defensive stocks and layering on an out-of-the-money covered call overlay using the S&P 500 as the underlying index. The ETF currently offers a 6.8% distribution yield.
To execute the call-writing portion without holding all 500 stocks in the index, JEPI uses a bit of financial engineering. It sells S&P 500 covered calls through a structured product known as an equity-linked note. These fixed-income-like securities are issued by large financial institutions, which introduces a layer of counterparty risk. JEPI is also fairly affordable, with a 0.35% expense ratio.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
JEPQ uses a similar strategy to JEPI, employing out-of-the-money covered call exposure through equity-linked notes. However, its portfolio construction is notably different. Instead of focusing on low-volatility defensive stocks, JEPQ holds a portfolio that closely mirrors the Nasdaq-100 index, giving it a large-cap growth tilt and an overweight to the technology, communication and consumer discretionary sectors.
Because of this positioning, investors can expect JEPQ to experience more ups and downs than JEPI. One benefit of that higher volatility is the ability to generate larger option premiums. As a result, JEPQ currently offers a higher 11% distribution yield, although like JEPI, the payout can fluctuate from month to month. It also charges the same 0.35% expense ratio and is well capitalized, with $23 billion in assets.
Roundhill Small Cap 0DTE Covered Call Strategy ETF (RDTE)
“Following back-to-back years of the S&P 500 rising over 25% on a total return basis, 2025 may be the time to refocus on income generation and risk management,” says Thomas DiFazio, ETF strategist at Roundhill Investments. For instance, small-cap investors can convert the higher volatility of this market segment into weekly income by using RDTE, which is currently paying a high 28.3% distribution yield.
This is possible because RDTE sells zero-day-to-expiration Russell 2000 index options, capturing high option premiums from daily volatility and rapid time decay. It uses a combination of flexible exchange options and standard index options, both of which are European-style — meaning they can only be exercised at expiration, reducing the risk of early assignment. The ETF charges a 0.95% expense ratio.
Roundhill Bitcoin Covered Call Strategy ETF (YBTC)
Some spot Bitcoin ETFs, like the iShares Bitcoin Trust ETF (IBIT), now have active option chains, making covered call Bitcoin ETFs like YBTC possible. Thanks to Bitcoin’s extremely high volatility, YBTC currently offers a staggering 43.1% distribution rate and, like RDTE, pays out weekly — something rarely seen in ETFs. However, as with RDTE, this high yield is not stable and the ETF’s price can fall.
YBTC gains its exposure through a synthetic covered call strategy. It combines a long call and a short put on IBIT at the same strike price to replicate owning the ETF with less upfront capital. It then sells a short call on IBIT to generate income, though this limits upside potential if Bitcoin surges. However, this advanced, purely options-based strategy comes at a high 0.95% expense ratio.
[READ: 7 Best Cryptocurrency ETFs to Buy]
Amplify CWP Enhanced Dividend Income ETF (DIVO)
DIVO is a unique covered call ETF that strikes more of a balance between capital appreciation and income, rather than simply maximizing yield. It holds an actively managed portfolio of 20 to 25 high-quality dividend growth stocks selected for strong free cash flow, earnings consistency and return on equity. An opportunistic covered call overlay then boosts its distribution yield to 4.9%.
“Unlike most index-based covered call ETFs that write calls robotically at set times, DIVO’s actively managed approach not only allows the manager to monitor holdings each day to ensure they meet quality and valuation metrics, but it also provides the flexibility to take advantage of timely opportunities by writing calls on individual stocks,” says Christian Magoon, CEO of Amplify ETFs. DIVO charges 0.56%.
Amplify CWP International Enhanced Dividend Income ETF (IDVO)
“IDVO owns high-quality, dividend-paying international stocks while maintaining the ability to tactically write covered calls on individual stocks,” Magoon says. “Foreign stock exposure will further diversify a U.S. stock portfolio and perhaps increase total return potential.” It is slightly more expensive than its U.S. counterpart, with a 0.66% expense ratio, and smaller, with just over $200 million in assets.
IDVO draws its portfolio from the MSCI ACWI ex USA Index, applying the same fundamental screens used by DIVO. The international stocks owned by IDVO span both developed and emerging markets. A tactical covered call overlay is then added, boosting the fund’s distribution yield to 6.2%. This is higher than DIVO in part because on average, international stocks tend to pay higher dividends than U.S. stocks.
iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW)
The iShares 20+ Year Treasury Bond ETF (TLT) is one of the most volatile bond ETFs on the market, with a three-year standard deviation of 17.2% — a level of price fluctuation nearly on par with equities. This volatility stems from its high 15.8-year duration, which makes it extremely sensitive to changes in long-term interest rates. However, TLT’s high volatility boosts the value of its options premiums.
TLTW takes advantage of this by selling one-month covered calls that are 2% out of the money on TLT. This converts the underlying volatility into steady income, with the fund currently paying a high 13.4% distribution yield. However, the trade-off is that if long-term yields fall and TLT rises sharply, upside potential is capped by the call options sold. The ETF charges a 0.35% expense ratio.
More from U.S. News
An Investor’s Guide to Options Trading
7 Top Income Investments for 2025
8 Top-Rated Income Funds to Buy in 2025
7 High-Yield Covered Call ETFs Income Investors Will Love originally appeared on usnews.com
Update 04/16/25: This story was previously published at an earlier date and has been updated with new information.
