I Hate Covered Call ETFs, But If You Must Own Them, Pick These Two

Jun. 02, 2025 11:55 PM ET, , , , , 166 Comments
Gary Gambino
6.34K Followers
(10min)

Summary

  • Covered call ETFs consistently underperform basic index ETFs over time due to capped upside and higher management fees.
  • The NEOS funds (SPYI, QQQI) stand out by selling calls at two different strikes each time period, which helps minimize underperformance.
  • Single-stock covered call ETFs, like those from YieldMax, have high fees and significantly underperform their underlying stocks; I strongly recommend avoiding them.
  • Owning index ETFs and selling as needed for income is superior, but NEOS funds offer convenient, passive monthly income for retirees unwilling to self-manage.

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Would You Sell Naked Puts For Retirement Income?

Covered call exchange-traded funds frequently show up on my Trending Analysis section of the Seeking Alpha home page. Several fund managers offer these ETFs based off of popular stock indexes which also have

This article was written by

Gary Gambino
6.34K Followers
I retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I already hold or am considering changing. I prefer to hold positions for the long-term unless there is a compelling reason to sell. I look for investment opportunities without regard to asset class, market cap, sector, or yield. I would rather maximize total return over time by buying when price is low relative to intrinsic value.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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