Welcome to The Profit Zone 👋
Where thousands of millionaires, CEO’s and high-performing entrepreneurs read the #1 financial newsletter on the web.
👉 Riding the Wave: Covered Call ETFs Attracting Next-Gen Investors 🌊
👉 Examples: Covered Call ETFs You May Want To Consider 💰
👉 Snowball Analytics: The #1 Portfolio Tracking Tool ✍
“Over the last few decades, investors’ timeframes have shrunk. They’ve become obsessed with quarterly returns. In fact, technology now enables them to become distracted by returns on a daily basis, and even minute-by-minute. Thus one way to gain an advantage is by ignoring the ‘noise’ created by the manic swings of others and focussing on the things that matter in the long term.”
Wall Street has Bloomberg. You have Stocks & Income.
Why spend $25K on a Bloomberg Terminal when 5 minutes reading Stocks & Income gives you institutional-quality insights?
We deliver breaking market news, key data, AI-driven stock picks, and actionable trends—for free.
Subscribe for free and take the first step towards growing your passive income streams and your net worth today.
Stocks & Income is for informational purposes only and is not intended to be used as investment advice. Do your own research.
Riding the Wave: Covered Call ETFs Attract Next-Gen Investor
The Popularity Among Younger Investors
Covered call ETFs are exchange-traded funds that employ a covered call strategy, holding a portfolio of stocks and selling call options to generate income from premiums.
This approach has become increasingly popular, especially among younger investors such as millennials and Gen Z, due to their financial needs in todays economy.
Costs are rising and the economy is facing some uncertainty. Younger investors are often living under a mountain of student loans and debt, and are increasingly becoming more focused on financial independence. These ETFs offer low maintenance streams of income, which is attractive in todays world.
The need for passive income is evident, as traditional savings accounts offer minimal returns for every day investors.
Covered call ETFs provide regular payouts, sometimes monthly and even weekly, which can be reinvested or used to cover living expenses, aligning with the “side hustle” mindset prevalent among younger generations. Although in the early stages, I suggest you reinvest these payouts back into the market.
Pros and Cons of Covered Call ETFs
Covered call ETFs offer several advantages and disadvantages.
Pros ✅
Consistent Income: Option premiums provide regular payouts, ideal for passive income seekers.
Lower Volatility: The income from premiums can offset losses during market downturns, reducing overall portfolio risk.
Diversification: Holding a basket of stocks mitigates individual stock risk, appealing to younger investors new to the market.
Accessibility: No options trading experience is required, making them accessible to beginners.
Cons ❌
Capped Upside: If stock prices surge, gains are limited as shares may be called away at the strike price.
Complexity: The options strategy can be hard to understand for beginners.
Tax Implications: Premiums may be taxed as short-term capital gains, impacting net returns.
Market Risk: While income helps, these ETFs are still subject to broader market fluctuations.
Below is an image that illustrates how your growth gets capped with covered call ETFs. Once the share price hits the strike price, your returns can go no higher.
Reasons Why An Investor Would Buy This Asset Type
Younger investors are drawn to covered call ETFs because they seek to:
Diversify income streams, supplementing their earnings without much additional work.
Hedge against market volatility, especially in uncertain economic times.
Build wealth passively, aligning with long-term goals like homeownership or early retirement.
Avoid active management, appealing to those with limited time or expertise investing.
Examples of Popular Covered Call ETFs
Several ETFs have gained traction recently, here’s a list of a few:
JPMorgan Equity Premium Income ETF $JEPI ( ▼ 0.07% ): Focuses on U.S. equities, offering a high monthly dividend yield, with a yield around 7-9% in 2025.
Global X NASDAQ 100 Covered Call ETF $QYLD ( ▲ 0.12% ): Provides exposure to tech-heavy NASDAQ 100 stocks, with income from call options, yielding around 10-12%.
NEOS Nasdaq 100 High Income ETF $QQQI ( ▲ 0.33% ): Offers high income through a covered call strategy, with yields up to 14%.
Amplify CWP Enhanced Dividend Income ETF $DIVO ( ▼ 0.02% ) Combines dividend growth stocks with a covered call overlay and earned a 5-star Morningstar rating for its performance.
Additional examples include:
SPDR S&P 500 ETF Trust $SPY ( ▲ 0.47% ), often used in covered call strategies, though not exclusively a covered call ETF.
Global X S&P 500 Covered Call ETF $XYLD ( ▲ 0.18% ), with a stable 9% yield, popular among beginners for its simplicity.
Comparative Analysis
To illustrate the trade-offs, consider the following table comparing key ETFs based on yield and expense ratio.
Ticker | Yield (Approx., 2025) | Expense Ratio | Focus |
|---|---|---|---|
JEPI | 7-9% | 0.35% | U.S. Equities |
QYLD | 10-12% | 0.60% | NASDAQ 100 |
QQQI | 14% | 0.68% | NASDAQ 100, High Income |
DIVO | 4-6% | 0.56% | Dividend Growth |
XYLD | 9% | 0.60% | S&P 500 |
(Source)
This table highlights the yield-income trade-off, with higher yields often coming at the cost of higher expense ratios and potential capped upside.
Conclusion and Considerations
Covered call ETFs are a compelling option for younger investors seeking passive income and market exposure with reduced volatility.
However the capped upside potential and tax implications require deeper research.
As with any investment, aligning your personal financial goals and conducting due diligence is essential if you’re choosing to invest in this space.
TLDR:
Research suggests covered call ETFs are becoming popular among younger investors for generating passive income, especially in today’s economic climate with rising costs.
It seems likely that these ETFs appeal to millennials and Gen Z due to their low-maintenance income streams and diversification benefits.
The evidence leans toward both pros, like consistent income and reduced volatility, and cons, like capped upside potential and tax implications, which investors should take into account when investing in this asset class.
After $2-3 million, there is no difference in your quality of life.
Agree or disagree?
— #THE DIVIDEND DOMINATOR (#@TheAlphaThought)
5:30 PM • Aug 2, 2025
Did you enjoy this newsletter?
Snowball Analytics: Elevate Your Returns Today
Take control of your investments with Snowball Analytics, a platform designed to simplify portfolio management and enhance your decision-making.
With advanced tools and implementing AI, Snowball Analytics helps you filter out noise, track performance, and stay ahead of the market.
Here’s why investors are choosing Snowball Analytics:
Powerful Stock Screener: Find high-quality stocks that align with your investment goals using Snowball’s stock screener. Filter out junk stocks by customizing criteria like dividend yield, payout ratios, growth metrics, or sector preferences, ensuring you invest in opportunities that match your strategy.
Engaging Community Hub: Join a thriving community of investors to explore public portfolios and see what others are buying. Follow top performers, share insights, and discover new ideas to refine your approach, all within Snowball’s Community section.
Benchmark Your Success: Compare your portfolio’s returns against major index benchmarks to gauge performance and ensure you’re on track.
Ready to streamline your investing journey? Sign up for Snowball Analytics today.
Use code “dividenddomination” for a juicy discount when you sign up.
Disclaimer: The publisher does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.
Dividend Domination Inc. is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.
THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.
Any projections, market outlooks or estimates herein are forward-looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.
The publisher, its affiliates, and clients of the publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Neither the publisher nor any of its affiliates accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.
By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.
