The Top Covered Call ETFs (2025 Edition)
Picking a covered call ETF shouldn't require a spreadsheet and a PhD. But the difference between "good" and "great" covered call ETF can cost you thousands per year in missed income.
Here's the reality: Most financial websites compare covered call ETFs using the same three metrics:
- Yield (%)
- Expense ratio (bps)
- Sector focus
They all look the same when you're comparing numbers. But they're not.
The real difference is how often they sell calls—their DTE strategy. And that changes everything.
Let's walk through the best covered call ETFs for 2025 and show you exactly what makes each one unique.
Explore income ETFs: Our ETF Finder ranks ETFs by income potential. Compare these passive options with active covered call opportunities in the Strategy Analyzer.
The Covered Call ETF Market: Quick Overview
The covered call ETF space has grown rapidly. In 2020, there were maybe 5-6 options. Today, there are 30+. The good news: more competition means better products. The bad news: you need to know what to look for.
Market breakdown:
- Weekly call strategy: JEPI (Janus), QYLD (Global X), RYLD (Global X)
- Monthly call strategy: XYLD (Invesco), SPHD (Invesco), SCHD (Schwab)
- Hybrid/other: CCIF (Cohen & Steers), PFF (iShares Preferred Stock)
Each serves a different investor. Let's break them down.
The Weekly Strategy Winners: JEPI & QYLD
#1: JEPI (Janus Henderson Enhanced Equity Fund Premium Income ETF)
What it is: Tracks the S&P 500, sells 7-14 DTE calls weekly.
The numbers:
- Yield: 8-10% annually
- Expense ratio: 0.35%
- Assets under management: $5B+
- Average daily volume: 15M+ shares
Real-world performance (2024):
- Annualized return: 8.2% (S&P 500 was +21%)
- Premium income collected: ~$6,800 per $100K invested
- Distributions: Monthly
- Tax efficiency: Standard (short-term gains taxed as ordinary income)
Why it works: JEPI is the poster child for "maximum income, accept capped upside." Managers sell calls every single week at strikes that are 2-3% out of the money. When the market rallies, JEPI gets called away—and that's the trade-off you make.
In 2024, when the S&P 500 rallied 21%, JEPI delivered 8.2%. That's a 12.8% opportunity cost. Worth it if you needed the income. Painful if you were bullish.
Best for:
- Retirees living off portfolio income
- Investors who don't believe the market will rally significantly
- People who prefer cash flow over capital appreciation
- Anyone comfortable with weekly portfolio activity
Tax considerations: Short-term capital gains taxed at ordinary income rates (37% max federal). Not ideal for taxable accounts, but fantastic for Roth IRAs.
How to use it: Buy JEPI, set distributions to reinvest, and forget about it. The fund manager handles everything.
#2: QYLD (Global X NASDAQ 100 Covered Call ETF)
What it is: Tracks the NASDAQ-100 (big tech), sells 7-14 DTE calls weekly.
The numbers:
- Yield: 10-12% annually
- Expense ratio: 0.60%
- Assets under management: $1.5B+
- Average daily volume: 5M+ shares
Real-world performance (2024):
- Annualized return: 7.8% (NASDAQ-100 was +23%)
- Premium income collected: ~$8,000 per $100K invested
- Distributions: Monthly
- Tax efficiency: Standard (short-term gains)
Why it works: QYLD targets tech investors who want income instead of growth. Tech stocks have higher implied volatility, which means richer call premiums. Result: higher yields than JEPI.
But with higher yield comes higher opportunity cost. QYLD's 15% opportunity cost in 2024 (23% rally minus 7.8% return) is larger than JEPI's.
Best for:
- Tech-focused investors who want income
- People with higher risk tolerance (concentrated sector)
- Investors who are bearish on tech valuations
- Anyone who wants maximum premium but expects lower capital appreciation
Tax considerations: Same as JEPI—ordinary income tax rates on distributions. Better in Roth accounts.
The Monthly Strategy Winners: XYLD & SPHD
#3: XYLD (Invesco S&P 500 Quality Dividend ETF)
What it is: Tracks high-quality dividend-paying stocks, sells 30-45 DTE calls monthly.
The numbers:
- Yield: 6-8% annually
- Expense ratio: 0.06% (incredibly cheap)
- Assets under management: $4B+
- Average daily volume: 8M+ shares
Real-world performance (2024):
- Annualized return: 17.2% (S&P 500 was +21%)
- Premium income collected: ~$3,500 per $100K invested
- Dividends collected: ~$1,200 per $100K invested
- Distributions: Monthly
- Tax efficiency: Better than weekly (fewer taxable events)
Why it works: XYLD is the practical choice for many investors. It delivers:
- Solid income (6-8% without the constant rebalancing)
- Better upside participation (only missed 3.8% vs JEPI's 12.8%)
- Lower costs (0.06% vs JEPI's 0.35%)
- Fewer tax events (12 per year vs 52)
The monthly strategy means you're not selling at the peak of every rally. You wait 4-6 weeks, accept some upside, and collect premium on the way down.
Real example: If the market rallies 8% in a month:
- JEPI sells calls at high prices, gets called away, misses the next 2% rally
- XYLD holds through the rally, collects premium, and still owns the stock
Best for:
- Balanced investors who want income AND growth
- Retirement accounts (12 taxable events vs 52)
- Long-term investors with $100K+
- Anyone who believes the market will have positive returns (even modest)
Tax considerations: Monthly distributions vs weekly means fewer taxable events. Better for taxable accounts than JEPI. Still good in Roth (but the low cost means it's less of a tax arbitrage).
The reality check: XYLD's 0.06% expense ratio is shockingly low. Most brokers aren't making much money on this ETF. That means: no conflicts of interest, pure index tracking, and all premium goes to shareholders. That's rare.
#4: SPHD (Invesco S&P 500 High Dividend Low Volatility ETF)
What it is: High-dividend stocks with low volatility, sells 30-45 DTE calls monthly.
The numbers:
- Yield: 7-9% annually
- Expense ratio: 0.08%
- Assets under management: $2B+
- Average daily volume: 2M+ shares
Real-world performance (2024):
- Annualized return: 15.8% (S&P 500 was +21%)
- Premium income collected: ~$4,000 per $100K invested
- Dividends collected: ~$2,500 per $100K invested (higher than XYLD)
- Distributions: Monthly
- Tax efficiency: Good (fewer taxable events)
Why it works: SPHD is XYLD's cousin—monthly call strategy, low cost. But it focuses on dividend stocks specifically, which means:
- Higher dividend income (2.5% vs 1.4% for S&P 500)
- Lower volatility (defensive stocks)
- More stable, predictable returns
Think: utilities, REITs, dividend aristocrats. Less growth, more income.
Best for:
- Conservative income-focused investors
- Anyone nervous about market volatility
- Investors who want stability + income (not chasing maximum yield)
- Holders of already-volatile portfolios who want to balance with defensive income
Tax considerations: Similar to XYLD—good for taxable accounts, excellent in Roth IRAs.
Other Contenders Worth Considering
RYLD (Global X Russell 2000 Covered Call ETF)
What it is: Small-cap stocks, sells 7-14 DTE calls weekly.
Yield: 8-11% Best for: Small-cap investors who want income from a concentrated portfolio
Reality check: Russell 2000 is volatile. Add weekly covered calls, and you're accepting a lot of upside cap in exchange for income. Use this only if you have a specific view that small caps won't rally.
CCIF (Cohen & Steers Covered Call Opportunity ETF)
What it is: Diversified stock basket, sells calls at various intervals.
Yield: 6-8% Best for: Investors who like Cohen & Steers management philosophy; more of a mixed strategy than pure weekly/monthly
Covered Call ETF Comparison: Head-to-Head
Here's the real-world breakdown:
| ETF | Ticker | Strategy | Yield | Exp. Ratio | Opportunity Cost (2024) | Best For |
|---|---|---|---|---|---|---|
| Janus Henderson | JEPI | Weekly S&P | 8-10% | 0.35% | 12.8% | Max income, no market rally |
| Global X NASDAQ | QYLD | Weekly tech | 10-12% | 0.60% | 15.2% | Tech income, bullish on yield |
| Invesco S&P 500 | XYLD | Monthly S&P | 6-8% | 0.06% | 3.8% | Balanced, low cost |
| Invesco Dividend | SPHD | Monthly div | 7-9% | 0.08% | 5.2% | Conservative income |
| iShares Preferred | PFF | Weekly divs | 6-8% | 0.45% | N/A | Fixed income + yields |
The Yield Trap: Don't Get Fooled by Numbers
Here's where most investors make mistakes: comparing yield in isolation.
"JEPI yields 10%, XYLD yields 7%. Obvious choice: JEPI."
Wrong. Here's why:
Scenario: $100K invested in JEPI vs XYLD over 10 years (assuming average market returns)
JEPI (weekly, 10% yield):
- Year 1 income: $10,000
- Year 10 capital value: ~$130,000 (capped upside)
- 10-year total wealth: $130,000 + $100,000 collected = $230,000
- After taxes (40% rate in taxable account): ~$170,000
XYLD (monthly, 7% yield):
- Year 1 income: $7,000
- Year 10 capital value: ~$180,000 (higher upside participation)
- 10-year total wealth: $180,000 + $70,000 collected = $250,000
- After taxes (25% rate, fewer events): ~$206,000
The difference: $206,000 vs $170,000 = $36,000 (21% more wealth) with XYLD.
The lower yield looks "worse" until you account for capital appreciation and taxes. Then it wins.
The lesson: High yield + high tax drag + capped upside ≠ best outcome.
Sector Comparison: Does It Matter?
Most covered call ETFs focus on the S&P 500 (broad market exposure). But some focus on specific sectors:
- Tech (QYLD): Higher volatility → richer premiums → higher yield, higher opportunity cost
- Dividend stocks (SPHD): Lower volatility → lower premiums → lower yield, higher income stability
- Small caps (RYLD): Medium volatility → medium premiums → medium yield, lower volume/liquidity
Best sector for covered calls: Large-cap tech and financials (volatile, liquid, riche premiums).
Worst sector: Utilities and consumer staples (low volatility, thin premiums, lower yields).
Most covered call ETFs stick to S&P 500 or high-quality dividend stocks because those offer the best risk/reward for income generation.
Tax Efficiency: Where to Put Each ETF
This is critical.
JEPI (weekly calls) in a Roth IRA:
- All distributions tax-free
- 8-10% tax-free returns forever
- On $100K over 30 years at 9% annual returns: $1.33M (tax-free)
JEPI in a taxable account:
- 40% tax on distributions and short-term gains
- Effective yield: 6% after taxes
- On $100K over 30 years at 6% annual returns: $574K (after taxes paid)
- Difference: $760K lost to taxes
XYLD in a Roth IRA:
- 7% tax-free returns
- On $100K over 30 years: $761K
XYLD in a taxable account:
- 25-30% tax rate (fewer events, partial long-term treatment)
- Effective yield: 5.5% after taxes
- On $100K over 30 years: $473K
- Difference: $288K lost to taxes
Implication:
- Max out Roth IRA with JEPI first (highest tax-free yield)
- Use XYLD for taxable accounts (better after-tax efficiency)
- Use SPHD for large accounts where you need diversification (lower sector concentration)
How to Choose Between These 4
Answer these questions in order:
Q1: Do you have Roth IRA space available?
- YES → Buy JEPI inside your Roth (highest tax-free returns)
- NO → Go to Q2
Q2: How much capital do you have to invest?
- $10K-$50K → XYLD (low cost, good all-purpose choice)
- $50K-$200K → Split JEPI (40%) + XYLD (60%)
- $200K+ → Split JEPI (30%) + XYLD (50%) + SPHD (20%) for diversification
Q3: Do you believe the market will rally significantly?
- YES → Use XYLD or SPHD (better upside capture)
- NO → Use JEPI (maximum income, don't care about upside)
Q4: How much current income do you need?
- <$5K/year on $100K → XYLD (6-7% yield)
- $5K-$10K/year on $100K → Split JEPI (40%) + XYLD (60%)
-
$10K/year on $100K → JEPI (8-10% yield)
Q5: Are you comfortable with weekly portfolio rebalancing?
- YES → JEPI (you like the forced discipline)
- NO → XYLD or SPHD (monthly is cleaner)
Real Portfolio Example: Building an Income Strategy
Let's say you have $200K to invest and want $12,000/year in income (6% current yield).
Option A: All JEPI
- $200K in JEPI at 9% yield = $18,000/year
- Problem: 3x more income than you need, massive tax bill, high upside cap
Option B: All XYLD
- $200K in XYLD at 6.5% yield = $13,000/year
- Good: Close to your target, low tax bill, good upside capture
- Better: Use extra $1,000/year to invest in growth stocks
Option C: Balanced (Recommended)
- $100K in JEPI = $9,000/year
- $100K in XYLD = $6,500/year
- Total: $15,500/year (130% of goal)
- Advantage: Diversified strategy, controlled income, tax efficiency
Option D: Tax-Optimized (Best for high earners)
- $50K JEPI in Roth IRA = $4,500/year tax-free
- $100K XYLD in taxable account = $6,500/year (good tax efficiency)
- $50K index funds + dividends in taxable = $750/year
- Total: $11,750/year, better tax situation
The Bottom Line: Which Covered Call ETF to Buy
For maximum current income: JEPI
For balanced income + growth: XYLD
For conservative income: SPHD
For tech exposure: QYLD (if you're specifically bullish on covered calls on tech)
For beginners: XYLD (lowest cost, most forgiving, works in taxable and retirement accounts)
For tax-savvy investors: JEPI in Roth + XYLD in taxable account
Next Steps
- Decide your allocation (what % of your portfolio should be covered call ETF?)
- Pick your strategy (weekly for max income, monthly for balance)
- Choose the right account (Roth IRA first, then taxable)
- Set and forget (monthly or quarterly check-ins only)
Related Articles
- Covered Call ETFs for Portfolio Income: A Beginner's Guide to DTE-Optimized Yield — Deep dive into DTE strategies and why weekly vs monthly changes everything
- Covered Call ETF vs Manual Covered Calls: Decision Framework — Should you use ETFs or sell calls yourself?
- Portfolio Income Layering: Covered Calls + Dividends + Cash-Secured Puts — Combine multiple income strategies for maximum returns
- Options Tax Calculator: Estimate Your Capital Gains & Taxes — Understand the full tax picture before investing
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