The history of covered call exchange-traded funds, or ETFs, in the U.S. can largely be traced back to the launch of the Invesco S&P 500 BuyWrite ETF (ticker: PBP) in December 2007.
The fund was designed to track the CBOE S&P 500 BuyWrite Index, combining a long position in the stocks of the S&P 500 with a monthly at-the-money, covered call strategy.
By selling covered calls against its holdings, the fund generates option premium income that can be distributed to shareholders. As of June 2026, PBP sports a distribution yield of 10.7%, calculated by annualizing the most recent monthly distribution and dividing it by the fund’s net asset value, or NAV.
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However, distributions are not the same as total return. While PBP has generated substantial income, its long-term performance has underperformed the broader market. Over the trailing 10-year period, the fund has delivered an annualized NAV total return of 7.2% with distributions reinvested. Over the same period, the S&P 500 returned 15.7% annually, more than double.
Selling covered calls generates income, but it also caps a portion of the portfolio’s upside during strong market rallies, in addition to creating a taxable event. Subsequent generations of covered call ETFs have attempted to address that trade-off in several ways.
Some funds no longer write calls on 100% of their holdings, while others sell out-of-the-money, or OTM, options. These approaches generate less premium income but preserve more upside participation when markets advance. Other managers have taken a different route altogether. Rather than writing calls directly on an index, some use equity-linked notes, or ELNs, or sell options on individual stocks.
At the same time, the universe of assets suitable for covered call strategies has expanded dramatically. While early products focused primarily on stocks, modern covered call ETFs now write options on bonds, commodities, precious metals and even cryptocurrencies.
The result is a far more diverse covered call ETF landscape than existed when PBP debuted nearly two decades ago. Investors can now choose between funds that prioritize maximum income, greater upside participation, lower volatility or exposure to specific asset classes.
Here are seven of the best covered call ETFs income investors will love in 2026:
| ETF | Expense Ratio | Distribution Yield |
| JPMorgan Equity Premium Income ETF (JEPI) | 0.35% | 9.4% |
| JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) | 0.35% | 11.4% |
| NEOS S&P 500 High Income ETF (SPYI) | 0.68% | 12.1% |
| NEOS Nasdaq-100 High Income ETF (QQQI) | 0.68% | 14.1% |
| Amplify CWP Enhanced Dividend Income ETF (DIVO) | 0.56% | 4.8% |
| Amplify CWP International Enhanced Dividend Income ETF (IDVO) | 0.65% | 6.1% |
| Roundhill Bitcoin Covered Call Strategy ETF (YBTC) | 0.96% | 36.5% |
JPMorgan Equity Premium Income ETF (JEPI)
“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.” Investors can simply buy and hold the ETF to collect monthly distributions.
JEPI is one of the most popular covered call ETFs, with $44 billion in AUM. The ETF begins with an actively managed portfolio of large-cap U.S. stocks selected for lower volatility. Then, up to 15% is allocated to ELNs that provide the payoff profile of an OTM monthly S&P 500 covered call strategy. The ETF pays a 9.4% distribution yield but struggles with tax efficiency as the payout is largely ordinary income.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
JEPQ is the more aggressive counterpart to JEPI. While still actively managed, the stocks in JEPQ are selected less for defense and more for growth, with a substantial Magnificent Seven presence in its top holdings. Layered on top of that is a similar allocation to ELNs that provide the risk and returns of a monthly OTM Nasdaq-100 covered call writing overlay. JEPQ pays a 11.4% distribution yield.
JEPQ yields more than JEPI because all else being equal, higher volatility in the underlying assets results in greater options premiums. The Nasdaq-100 covered calls sold by JEPQ are riskier than the S&P 500 covered calls sold by JEPI, so investors are being compensated for that uncertainty. However, the use of ELNs once again results in poor tax efficiency for JEPQ, as most of its distribution is ordinary income.
NEOS S&P 500 High Income ETF (SPYI)
When held in a taxable account, every distribution from a covered call ETF can create a tax liability, reducing an investor’s after-tax return. Income investors seeking greater tax efficiency may prefer SPYI at a 0.68% expense ratio. The fund combines a long portfolio of S&P 500 stocks with S&P 500 index options, which are treated as Section 1256 contracts and receive favorable 60-40 tax treatment.
This means that 60% of the ETF’s options premiums are taxed at long-term capital gains rates and 40% at short-term rates, regardless of the holding period. The fund also actively engages in tax-loss harvesting, which can allow a significant portion of its 12.1% distribution rate to be classified as return of capital. This reduces an investor’s adjusted cost basis and defers taxes until shares are ultimately sold.
NEOS Nasdaq-100 High Income ETF (QQQI)
Income investors seeking Nasdaq-100 exposure but with higher tax efficiency may find QQQI a better alternative to JEPQ. QQQI employs a strategy similar to SPYI, pairing a long portfolio of Nasdaq-100 stocks with index option writing and active tax-loss harvesting. According to the fund’s latest 19a-1 notice, approximately 99% of its most recent monthly distribution was classified as return of capital.
Because the Nasdaq-100 is generally more volatile than the S&P 500, QQQI is able to generate larger option premiums than SPYI and currently sports a higher 14.1% distribution rate. Over the trailing one-year period, QQQI returned an annualized 31%, outperforming the Cboe Nasdaq-100 BuyWrite Monthly Index’s return of 23.9% but still lagging the base Nasdaq-100’s return of 43.1%.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
Some income investors may overlook DIVO because of its relatively modest 4.8% distribution rate, but the fund’s risk-adjusted returns have been competitive, earning a five-star Morningstar rating. The strategy begins with an active portfolio of 20 to 25 stocks screened for dividend growth, earnings growth, management quality, cash flow and return on equity. Then, DIVO sells covered calls on individual stocks.
“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.
Amplify CWP International Enhanced Dividend Income ETF (IDVO)
IDVO is another Amplify covered call ETF that has earned a five-star Morningstar rating thanks to its strong risk-adjusted returns. The fund begins with a portfolio of 30 to 50 stocks selected from the MSCI ACWI ex USA Index using many of the same fundamental screens employed by DIVO. From there, a covered call overlay on individual stocks, along with underlying dividends, helps support a 6.1% distribution rate.
“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.” IDVO’s annualized total return over the trailing three-year period was 25%, outperforming the Vanguard Total International Stock ETF (VXUS).
Roundhill Bitcoin Covered Call Strategy ETF (YBTC)
Higher volatility generally leads to larger covered call premiums because option sellers demand more compensation for the increased risk of the option finishing in the money. Investors can see this dynamic in YBTC, which uses Bitcoin-linked covered call exposure to support a very high 36.5% distribution rate. However, this ETF is significantly more expensive than most covered call ETFs, with a 0.96% expense ratio.
Rather than holding Bitcoin directly, YBTC establishes a synthetic long position in an iShares spot Bitcoin ETF using a purchased at-the-money call and a sold at-the-money put, then writes covered calls against that exposure. The manager publishes strike prices, overwrite levels and remaining upside potential on its website. YBTC is also one of the few covered call ETFs that pay distributions weekly.
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7 High-Yield Covered Call ETFs Income Investors Will Love originally appeared on usnews.com
Update 06/17/26: This story was previously published at an earlier date and has been updated with new information.
