Important Disclosure. General solicitation under Rule 506(c). For accredited and professional investors only. This is not an offer or recommendation. Access to documents requires accredited verification. Any subscription is made solely by the current private placement memorandum and executed agreements.
Best High Yield Covered Call ETFs
Covered call ETFs can deliver large monthly distributions by selling call options on equity exposures. The trade is simple. More income now, less upside later, with the risk of NAV drawdowns when markets fall. Below is a direct list of well known products, why they pay, and the trade offs. After the list, we outline our 506(c) fund for investors who want rules, guardrails, and reporting instead of a loose basket of tickers.
Reality check. Higher yield usually means higher overwrite and more drag in strong markets. Single stock option income funds can post extreme payouts. They are not stable core holdings.
Quick Picks
Highest headline payouts
Volatility drives premium. Expect capped upside and bumpy NAV.
Higher income with some guardrails
Broader baskets or quality tilts. Income is lower than the extreme names. The ride is steadier.
Top Covered Call ETFs By Category
Broad Index Covered Call
| Ticker | Underlier | Why Yield Screens High | Typical Trade Off |
|---|---|---|---|
| QYLD | Nasdaq 100 | Full overwrite on a volatile index | Heavy cap on upside. Long term NAV drag possible |
| XYLD | S&P 500 | Consistent monthly call premium | Misses strong rallies. Income varies with vol |
| RYLD | Russell 2000 | Small cap volatility lifts premiums | Higher drawdown risk in risk off tapes |
| SPYI | S&P 500 overlay | Active overwrite with monthly cash flow focus | Still caps upside. Dependent on vol regime |
| QQQI | Nasdaq 100 overlay | Options on a tech heavy index | Underperforms in strong tech recoveries |
Thematic and International
| Ticker | Theme | Why Yield Screens High | Typical Trade Off |
|---|---|---|---|
| KLIP | China internet | High implied volatility in the theme | Macro swings and policy risk hit NAV |
| TLTW | Long duration Treasuries | Vol in rates boosts premium | Duration moves can be large. Income is not bond like |
Quality Tilt and Selective Calls
| Ticker | Approach | Why Investors Pick It | Trade Off |
|---|---|---|---|
| JEPI | Large cap quality with option overlay | Lower volatility than full buy write | Yield sits below the extremes |
| JEPQ | Tech tilt with overlay | Higher income than JEPI | More bumpiness from tech concentration |
| DIVO | Dividend growth plus selective calls | Smoother profile and balanced income | Lower headline yield by design |
Single Stock Option Income and Baskets
| Ticker | Underlier | Why Yield Screens High | Critical Risk |
|---|---|---|---|
| MSTY | MicroStrategy | Extreme implied volatility drives premium | Violent NAV swings and heavy return of capital in payouts |
| ULTY | Rotating high vol names | Weekly call selling across volatile stocks | Path dependence and concentration risk |
| TSLY | Tesla | High vol single name premium | Gaps and event risk can hit NAV |
| NVDY | Nvidia | Very high vol in a crowded stock | Upside is capped while downside remains |
Reminder. Distribution rates move with price and volatility. Classifications can include return of capital. None of the above is a recommendation.
Why Consider The 506(c) Fund Instead Of Buying ETFs Directly
Position Sizing and Limits
Hard caps per ETF and per theme. No single name sleeve beyond a tight limit. Avoids accidental concentration when several funds share the same drivers.
Dynamic Overwrite
Coverage ranges are set by rules. We raise coverage into strong markets and reduce it in drawdowns within stated bands to protect upside when it matters.
Hedging and Cash Sleeve
Index puts or collars when drawdown markers are breached. A small cash or T bill sleeve funds hedges and reduces forced selling.
Execution and Liquidity
Spread guards, ADV throttles, and staged entries during volatility spikes. We avoid illiquid expiries and crowded rolls.
NAV Control Rules
If trailing drawdown breaches a threshold, we slow distribution growth, cut high beta exposure, and reset coverage until risk normalizes.
Transparent Reporting
Monthly statement, holdings view, coverage ratios, roll logs, and a risk pack that shows the dials that drive outcomes.
Investor Snapshot
| Item | Summary |
|---|---|
| Exemption | Rule 506(c) with accredited verification before documents are shared |
| Objective | Monthly USD distributions from option premium and ETF payouts |
| Target Range | 12 to 16 percent annualized distribution target. Not guaranteed |
| Universe | Large and liquid covered call ETFs on indices, sectors, and select themes |
| Risk Controls | Strike bands, short tenors, collars or puts at drawdown triggers, cash or T bill sleeve |
| Capacity | Soft close at 25 million USD. New subscriptions at manager discretion |
| Minimum | 250,000 USD |
| Subscriptions | Acceptances per PPM. Cutoff and funding windows apply |
| Redemptions | Per PPM with notice. Gates or fees may apply |
| Fees | Management and performance terms per PPM. Investors bear ETF expense ratios and operating costs |
| Reporting | Monthly statements and risk pack. Quarterly review on request |
| Tax | Distributions may include return of capital. Individual outcomes vary |
Full terms are provided only after accredited verification.
Process and Controls
Strikes and Delta
Systematic strike bands (for example 10 to 30 delta) with adjustments for skew and realized versus implied variance.
Tenor and Rolls
Short tenors to capture time decay. Early rolls when carry decays. Avoid illiquid expiries.
Hedges and Buffers
Collars or puts when drawdown markers are breached. Cash or T bill sleeve funds hedges and reduces forced selling.
Position Limits
Single ETF and sector caps with ADV and spread screens to control concentration and trading impact.
Execution Quality
Order throttles by ADV, spread guards, and staged entries during volatility spikes.
Transparency
Coverage ratios, roll logs, holdings view, and variance checks in monthly reports.
Operations and Governance
| Role | Firm |
|---|---|
| Administrator | Independent third party administrator. Name disclosed in current PPM |
| Auditor | Independent public accounting firm. Name disclosed in current PPM |
| Custody | Qualified custodian. Name disclosed in current PPM |
| Prime or Brokerage | Registered broker dealer. Name disclosed in current PPM |
| Legal Counsel | Securities counsel. Name disclosed in current PPM |
| Compliance | Best execution, allocation, and conflicts policies in place |
Service providers may change. Final names appear in current offering documents.
How To Request Access
Cutoffs, dealing terms, and fees are defined in the PPM and subscription booklet.
Request 506(c) Access
After accredited verification, we share the PPM, subscription pack, sample monthly report, fee schedule, and risk disclosures.
Email To Request AccessDisclaimers. Marketing material. Not investment, legal, tax, or accounting advice. Past performance does not guarantee future results. Investing involves risk, including loss of principal. Options involve risk and are not suitable for all investors. Covered call strategies cap upside and can accelerate losses in down markets. Distribution rates vary with volatility and can include return of capital. Any tax character of distributions is subject to accountant determination and may change. ETF holdings introduce equity, options, liquidity, tracking, and counterparty risks. References to third party ETFs and issuers are for information only. Trademarks belong to their owners. We are not affiliated with BlackRock, iShares, Fidelity, Global X, JPMorgan, KraneShares, YieldMax, or any other issuer mentioned. This page does not solicit the purchase or sale of any security. The 506(c) offering, if any, is available only to accredited investors who complete verification and receive current offering documents. No offer or sale in any jurisdiction where unlawful. Non U.S. persons must comply with local rules and restrictions. U.S. ERISA investors should consult counsel regarding plan eligibility. Conflicts of interest can exist where fees are charged. Read the current private placement memorandum and executed agreements. They control over any summary here.
