This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services. Nonetheless, our opinions are our own.
The information presented in this article is accurate to the best of our knowledge at the time of publication. However, information is subject to change, and no guarantees are made about the continued accuracy or completeness of this content after its publication date.
Do you want to improve your investment strategy and make more money from your portfolio? Covered call ETFs could be the answer for you. These funds are a good way to deal with today’s changing market because they combine the potential for capital appreciation with attractive yields.
We will look at some of the best covered call ETFs that are available right now. Whether you’re an experienced investor or just starting out, you’ll learn a lot about their strategies, how well they do, and what makes each fund unique.
- Global X Nasdaq 100 Covered Call ETF (QYLD)
- BlackRock Enhanced Equity Yield ETF (BDJ)
- Nuveen S&P 500 Dynamic Overwrite Fund (SPXX)
- Invesco S&P 500 BuyWrite ETF (PBP)
- Horizons Nasdaq-100 Covered Call ETF (HXQ)
- Amplify CWP Enhanced Dividend Income ETF (DIVO)
- Janus Henderson Short Duration Income ETF (VNLA)
- ProShares S&P MidCap Low Volatility ESG ETF (LVOL)
- Cambria Shareholder Yield ETF (SYLD)
- First Trust ISE Revere Natural Gas Index Fund (FCG)
- Final Thoughts
- Frequently Asked Questions
- Recommended Reads
Global X Nasdaq 100 Covered Call ETF (QYLD)
The Global X Nasdaq 100 Covered Call ETF (QYLD) focuses on the tech-heavy Nasdaq-100 Index, offering investors attractive monthly income through a covered call strategy while maintaining exposure to high-growth technology stocks.
- Monthly Income: QYLD generates consistent cash flow by collecting premiums from writing call options on the Nasdaq-100’s underlying holdings.
- Diversified Exposure: Investors gain access to major technology companies such as Apple, Microsoft, and Amazon.
- Risk Mitigation: The options strategy can help buffer against volatility, although it may cap upside gains during strong rallies.
This blend of dividend yield and equity exposure makes QYLD an intriguing choice for income-oriented investors seeking growth potential in the tech sector.
BlackRock Enhanced Equity Yield ETF (BDJ)
The BlackRock Enhanced Equity Yield ETF (BDJ) combines large-cap U.S. equity investments with a dynamic covered call approach to potentially generate higher yields.
- Higher Yields: By selling call options, BDJ aims to generate income above what standard equity investments offer.
- Risk Mitigation: Its dynamic option-writing process may provide downside protection during volatile markets.
- Diversification: Exposure to established corporations balances income generation with capital appreciation potential.
BDJ suits investors who want steady income and risk management without fully giving up growth opportunities.
Nuveen S&P 500 Dynamic Overwrite Fund (SPXX)
The Nuveen S&P 500 Dynamic Overwrite Fund (SPXX) uses an innovative covered call writing strategy on large-cap S&P 500 stocks to boost yield without fully sacrificing growth potential.
- Income Generation: SPXX focuses on premium income from call options to enhance returns.
- Diversification: It holds a broad range of S&P 500 companies, reducing sector-specific risks.
- Aggressive Strategy: The dynamic overwrite approach allows flexible risk management depending on market conditions.
- Potential Upside Capture: Although call writing can limit gains in bull markets, SPXX seeks to preserve capital appreciation potential.
This fund is designed for yield-seekers wanting an active management style layered on a solid equity base.
Invesco S&P 500 BuyWrite ETF (PBP)
The Invesco S&P 500 BuyWrite ETF (PBP) offers conservative investors a way to earn income while holding the popular S&P 500 Index.
- Consistent Income: PBP generates cash flow through premiums collected by writing calls on the S&P 500.
- Downside Protection: The covered call strategy helps cushion losses during market declines.
- Simplicity: PBP provides straightforward, broad-market exposure without complex stock selection.
Ideal for risk-averse investors, PBP balances steady income with equity market participation.
Horizons Nasdaq-100 Covered Call ETF (HXQ)
The Canadian-listed Horizons Nasdaq-100 Covered Call ETF (HXQ) delivers access to top technology stocks combined with options strategies that enhance income.
- Exposure to Innovation: HXQ invests in leading tech companies like Apple, Microsoft, Amazon, NVIDIA, and Alphabet.
- Covered Call Income: Writing call options generates additional yield while offsetting volatility.
- Regular Cash Flow: Premiums collected contribute to steady monthly income distributions.
HXQ is a compelling option for investors seeking tech sector growth and enhanced income.
Voted "Best Overall Budgeting App" by Forbes and WSJ
Monarch Money helps you budget, track spending, set goals, and plan your financial future—all in one app.
Get 50% OFF your first year with code MONARCHVIP
Amplify CWP Enhanced Dividend Income ETF (DIVO)
The Amplify CWP Enhanced Dividend Income ETF (DIVO) combines dividend-paying equities with an options overlay to amplify income streams.
- Dividend Focus: DIVO invests in high-quality companies with consistent dividend histories.
- Options Overlay: Covered call strategies add premium income on top of dividends.
- Growth Participation: The fund maintains upside potential while enhancing cash flow.
DIVO suits investors who want reliable dividends enhanced by tactical income generation.
Janus Henderson Short Duration Income ETF (VNLA)
The Janus Henderson Short Duration Income ETF (VNLA) offers a balanced approach by combining covered call strategies with short-duration fixed-income securities.
- Enhanced Yield: VNLA captures additional premiums from call options.
- Reduced Interest Rate Risk: Its focus on short-duration bonds mitigates sensitivity to rate changes.
- Portfolio Diversification: It blends equity options and bonds for conservative income investors.
VNLA fits portfolios seeking income with a blend of fixed income and equity option premiums.
The ProShares S&P MidCap Low Volatility ESG ETF (LVOL) targets mid-cap companies with strong ESG credentials while applying covered calls for income enhancement.
- Social Responsibility: LVOL invests in firms committed to environmental and governance standards.
- Income and Risk Management: Covered call premiums provide income and help reduce volatility.
- Growth Potential: Mid-cap exposure balances growth and stability.
LVOL appeals to investors by combining sustainable investing with income needs.
The Cambria Shareholder Yield ETF (SYLD) seeks high shareholder returns through dividends, stock buybacks, and periodic option sales.
- Enhanced Income: Options premiums add to dividends and buyback yields.
- Risk Management: Covered calls help limit downside while maintaining upside participation.
- Sector Diversification: Broad sector exposure supports stable returns in volatile markets.
SYLD is designed for income-focused investors who want diversified sources of yield.
First Trust ISE Revere Natural Gas Index Fund (FCG)
The First Trust ISE Revere Natural Gas Index Fund (FCG) focuses on natural gas production companies and employs derivatives, including call options, to boost yields.
- Energy Sector Exposure: FCG invests in major natural gas producers.
- Enhanced Income: Written call options generate additional premium income.
- Seasonal Strategy: The fund capitalizes on peak demand periods to maximize returns.
FCG offers investors a specialized income opportunity in the energy sector beyond typical commodity plays.
Final Thoughts
Covered call ETFs are a great way to make more money while still being exposed to stocks. Covered call ETFs are great for a lot of different types of investors because they have a lot of different types of funds. For example, QYLD and HXQ are tech-focused funds, BDJ and SPXX are dynamic strategies, and PBP and VNLA are conservative options.
Investors can choose funds that fit their income needs, risk tolerance, and growth expectations by learning about the structure and strategy of each fund. Covered call ETFs can help reduce the ups and downs of your portfolio, give you good yields in low-interest environments, and spread your investments across different sectors.
If your plan is to make steady money without giving up all growth, you might want to add covered call ETFs to your portfolio. As always, talk to a financial advisor about how to make your investments fit your goals and risk tolerance.
Frequently Asked Questions
What is a covered call ETF?
A covered call ETF is an exchange-traded fund that holds a portfolio of stocks and writes (sells) call options on those stocks to generate income. This strategy aims to provide regular cash flow while limiting some upside potential.
How does a covered call strategy generate income?
Covered call strategies earn income by selling call options on stocks the ETF owns. The premiums collected from these options are distributed to investors, often on a monthly basis.
Are covered call ETFs good for beginners?
Yes, they can be. Covered call ETFs are professionally managed and offer an easy way to gain exposure to options strategies without needing to trade options directly. However, beginners should understand that the strategy may cap potential gains in rising markets.
What are the main benefits of covered call ETFs?
- Monthly or quarterly income from option premiums
- Risk mitigation during market volatility
- Diversified exposure to equities across sectors or themes
What are the risks of investing in covered call ETFs?
- Limited upside: Gains are capped if the market rises sharply.
- Still exposed to losses if the underlying stocks decline.
- Tax implications may vary depending on how the income is generated.
Reviewed and edited by Albert Fang.
See a typo or want to suggest an edit/revision to the content? Use the contact us form to provide feedback.
At FangWallet, we value editorial integrity and open collaboration in curating quality content for readers to enjoy. Much appreciated for the assist.
Did you like our article and find it insightful? We encourage sharing the article link with family and friends to benefit as well - better yet, sharing on social media. Thank you for the support! 🍉
Article Title: Earn Monthly Income with Covered Call ETFs
https://fangwallet.com/2025/07/26/earn-monthly-income-with-covered-call-etfs/The FangWallet Promise
FangWallet is an editorially independent resource - founded on breaking down challenging financial concepts for anyone to understand since 2014. While we adhere to editorial integrity, note that this post may contain references to products from our partners.
The FangWallet promise is always to have your best interest in mind and be transparent and honest about the financial picture.
Become an Insider
Subscribe to get a free daily budget planner printable to help get your money on track!
Make passive money the right way. No spam.
Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned. The opinions expressed here are the author's alone.
The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur including the potential loss of principal.
Source Citation References:
+ Inspo
There are no additional citations or references to note for this article at this time.
