Why Investors Are Buzzing Over Covered Call ETFs (And the 5 Best Covering the S&P)

If you’ve been around the block in the investment world—or even just peeked at it lately—you’ve probably noticed something peculiar: covered call ETFs are the new rock stars. They’re high-yield, monthly (sometimes weekly!) money machines that have investors nodding their heads in approval like they’re at a financial Coachella.

The trick with these funds? They generate income by selling covered calls on popular indices like the S&P 500 and NASDAQ 100. But here’s the kicker—each company swears it has the secret sauce, leaving investors scratching their heads and pondering whether to jump ship every time a shiny new fund hits the scene.

Let’s cut through the noise with some solid picks. Today, I’m dishing out my top five high-yield S&P 500 buy-write ETFs. Ready? Let’s go.

5. NEOS S&P 500 High Income ETF (SPYI)

First up is SPYI, launched in 2022 and already sitting on a cool $2.11 billion. NEOS didn’t come to play—they’re here to protect your precious capital and dish out hefty payouts. Their trick? Instead of static monthly calls, they dabble in dynamic out-of-the-money (OTM) calls and sprinkle in credit spreads when things get spicy.

Sounds impressive, right? The only catch is that aiming for a 12% payout might have them stretching a bit thin on total returns.

Vital Stats:

• Dividend Yield: 11.95%

• Expense Ratio: 0.68%

• YTD Return: 20.70%

• Inception Date: 08/30/2022

4. JPMorgan Equity Premium Income ETF (JEPI)

JEPI is the cool kid here, with a whopping $36.57 billion under its belt. If you like your ETFs steady and predictable, this one’s for you. JEPI excels in turbulent times—it’s basically the chill friend who tells you everything will be fine when the market’s on fire.

Unlike others, JEPI doesn’t track the S&P 500 directly. It curates its own portfolio, avoiding the drama of any single sector tanking. With yields dancing between 7% and 12%, it’s a retiree’s dream date.

Vital Stats:

• Dividend Yield: 7.20%

• Expense Ratio: 0.35%

• YTD Return: 16.81%

• Inception Date: 05/20/2020

3. Roundhill S&P 500 0DTE Covered Call Strategy ETF (XDTE)

Next up, we’ve got XDTE, a bit of a maverick in the covered call world. Instead of the usual monthly dance, this fund sells calls daily. That’s right—every. single. day. It’s like playing blackjack with the market and somehow winning more than you lose.

The best part? It pays out weekly, with a jaw-dropping yield of 18.54%. Sure, it’s risky, but isn’t that half the fun?

Vital Stats:

• Dividend Yield: 17.61%

• Expense Ratio: 0.95%

• YTD Return: 14.24% (since March 2024)

• Inception Date: 03/07/2024

2. Goldman Sachs S&P 500 Core Premium Income ETF (GPIX)

If you like your coffee with just the right amount of cream, GPIX might be your jam. It uses a more conservative strategy, targeting a modest 8.5% yield but making up for it with steady capital appreciation.

Think of GPIX as the reliable friend who doesn’t overpromise but still shows up when it counts. Since launch, it’s outpaced some flashier competitors like SPYI, proving that slow and steady sometimes does win the race.

Vital Stats:

• Dividend Yield: 7.44%

• Expense Ratio: 0.29%

• YTD Return: 23.03%

• Inception Date: 10/24/2023

1. ProShares S&P 500 High Income ETF (ISPY)

Finally, we have ISPY, the ETF that’s just right. It plays it safe with daily calls but doesn’t go overboard chasing yields. At 9.13%, ISPY offers a respectable payout while still leaving room for growth.

Vital Stats:

• Dividend Yield: 9.01%

• Expense Ratio: 0.55%

• YTD Return: 23.44%

• Inception Date: 12/18/2023

Investing in covered call ETFs can be an excellent strategy for those seeking steady income, especially in uncertain markets. Each fund has its strengths, whether it's balancing yield with capital appreciation, mitigating downside risks, or generating income in unique ways.

SPYI offers flexibility with its dynamic calls, JEPI provides stability through its curated portfolio, and XDTE embraces a more aggressive, short-term approach. Meanwhile, GPIX prioritizes a balanced strategy, and ISPY strikes an effective middle ground between income and growth potential.

Ultimately, the best choice depends on your financial goals, risk tolerance, and investment horizon. Carefully consider how these funds align with your overall strategy, and remember that diversification and thorough research are key to long-term success in any portfolio.