Prefer a hands-off approach? These ETFs and CEFs do the work for you.
Covered call strategies offer a great way for retirees and income investors to boost cash flow from a stock portfolio. But managing options yourself can be complex, time-consuming, and nerve-wracking. Fortunately, several ETFs and closed-end funds (CEFs) automate the process—delivering consistent income without the headaches.
Here are some of the best “set-it-and-forget-it” covered call funds to consider:
1. JPMorgan Equity Premium Income ETF (JEPI)
JEPI is a top pick for conservative investors seeking monthly income. It blends low-volatility U.S. large-cap stocks with an actively managed options overlay, writing covered calls on the S&P 500. The result is a lower-risk income strategy that pays attractive monthly distributions (often 7–9% annually), with less price fluctuation than many equity funds. It’s a great choice for those wanting steady income without chasing risky yield.
2. Global X Nasdaq 100 Covered Call ETF (QYLD)
QYLD writes monthly at-the-money covered calls on the Nasdaq-100 Index, making it one of the most popular high-income ETFs. Its yield can exceed 10%, though that comes with limited upside potential during bull markets. It’s ideal for investors who prioritize income over growth and want a fund that tracks a tech-heavy index while still generating dependable cash flow.
3. Global X S&P 500 Covered Call ETF (XYLD)
XYLD follows a similar structure to QYLD but writes calls on the broader S&P 500. It offers a balance between income and blue-chip stability. Investors can expect monthly yields around 8% or more, though like most covered call funds, upside potential is capped. XYLD is a solid core holding for retirees who want income from the entire U.S. market, not just tech stocks.
4. JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
JEPQ focuses on high-quality Nasdaq-listed stocks and employs a similar options overlay strategy as JEPI. The fund seeks lower volatility while still tapping into tech-heavy Nasdaq earnings power. With monthly payouts and active management, JEPQ provides income plus some capital appreciation—especially appealing if you want more tech exposure but with income and less risk.
5. Nationwide Risk-Managed Income ETF (NUSI)
NUSI combines a Nasdaq-100-based equity portfolio with a unique options strategy that includes both covered calls and protective puts. This helps reduce downside risk during market declines, making it a more defensive play. Its monthly income yield varies but is generally around 7–8%. If you’re concerned about market drops but still want tech sector income, NUSI could be a smart fit.
6. Eaton Vance Tax-Managed Buy-Write Opportunities Fund (ETV) (CEF)
ETV is a closed-end fund that writes covered calls on both the S&P 500 and Nasdaq-100, aiming to produce high monthly income while offering some downside protection. Managed by the experienced team at Eaton Vance, it often yields 8% or more. As a CEF, it can trade at discounts or premiums to NAV, so savvy investors may find extra value by buying when it trades below its underlying asset value.
7. Nuveen S&P 500 Buy-Write Income Fund (BXMX) (CEF)
BXMX uses a conservative buy-write strategy on the S&P 500 to generate income with lower volatility. Managed by Nuveen, this fund has been a long-time favorite among income-seeking investors. While yields are slightly lower than some peers (typically around 6–7%), the fund offers a smoother ride during market turbulence. Great for risk-averse retirees who still want solid monthly income.
Final Thoughts
These ETFs and CEFs offer hands-free income strategies, perfect for retirees and conservative investors who want cash flow without trading options themselves. Whether you want broad-market exposure, tech income, or a defensive approach, there’s likely a fund that fits your goals.
Disclaimer:
This post is for informational purposes only and does not constitute investment advice. All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Consult a qualified financial advisor before making investment decisions.