Complete Guide to Covered Call ETFs Investing in Singapore 2026

Covered call ETFs have quietly become one of the most consequential developments in income investing. JPMorgan’s JEPI crossed $44.5 billion in assets under management in early 2026, cementing its position as the world’s largest actively managed ETF. Its younger sibling, JEPQ, has amassed $34.6 billion in under four years — an accumulation rate the ETF industry has rarely seen.

For investors in Singapore, the timing is not coincidental. 6-month MAS T-bills now yield around 1.6%, down from a peak of 3.7% in mid-2024. High-grade fixed deposit rates have compressed in lockstep. 

Covered call ETFs, by contrast, are distributing 8–12% per year in monthly income/ yield — though as this guide will show, that headline yield comes with trade-offs that every Singapore investor needs to understand before committing capital.

What are covered call ETFs?

Covered call ETFs are funds that hold a basket of stocks and simultaneously sell (write) call options on those holdings to generate premium income. 

The strategy has a formal name — buy-write — referring to the dual action of buying the underlying stock and writing a call option against it. The “covered” designation means the fund actually owns the shares, removing the unlimited loss exposure associated with naked call writing.

How the buy-write strategy works

When a covered call ETF sells a call option, it grants the option buyer the right to purchase shares at a pre-set price (the strike price) by a specific date (the expiry). 

In return, the ETF collects a cash payment upfront — the option premium. This premium is then distributed to fund shareholders as income, typically monthly.

Here is a simplified worked example:

A covered call ETF holds 100 shares of a tech stock at $200 per share (portfolio value: $20,000). It sells a one-month call option with a strike price of $210, collecting $2 per share in premium ($200 total)

The size of option premiums depends heavily on implied volatility (IV), commonly tracked through the VIX index. 

When volatility is elevated, option buyers pay more for protection and speculation — meaning richer premiums for the ETF. When markets are calm, premiums compress. This is why covered call ETF distributions fluctuate month to month rather than paying a fixed amount.

Why covered call ETFs exist

Before covered call ETFs, implementing an options income strategy required an options-approved brokerage account, ongoing management of expiry dates, strike selection, and contract rolling — all demanding meaningful time and technical knowledge. 

Covered call ETFs compress this complexity into a single-ticker product that distributes income monthly and trades during regular exchange hours like any equity. The $79+ billion pooled in JEPI and Ju lEPQ alone reflects the scale of investor demand for this kind of packaged access.

Covered call ETF basics investors should understand

Before comparing different covered call ETFs, it is important to understand how these funds work. While they all aim to generate income through options, the way each ETF implements the strategy can differ significantly.

1. Strategy types

Covered call ETFs all follow the same basic idea: they own stocks and sell call options to generate income.

However, different funds do this in different ways. Some funds sell call options on all of their holdings, while others sell options on only part of their portfolio. Some funds even use derivatives issued by banks instead of selling options directly.

Understanding the strategy type helps investors assess how the ETF will behave in different market environments.

2. Distribution frequency

Covered call ETFs are typically designed for income investors, which is why most of them distribute cash frequently.

Monthly distributions are common because option premiums are often generated on monthly option cycles.

3. Distribution sources

The income paid by covered call ETFs may come from several sources.

Because distributions can include multiple components, headline yields should not always be interpreted as pure income.

4. Option coverage level

Another important factor is how much of the portfolio is used for writing call options.

Higher coverage generally leads to higher income but lower upside participation.

5. Underlying exposure

Covered call ETFs can be built on different equity markets. The underlying exposure influences both yield and volatility.

Funds that write options on technology-heavy indexes, such as the Nasdaq-100, often generate higher premiums because these stocks tend to have higher volatility.

6. Yield interpretation

Covered call ETF yields can appear significantly higher than those of traditional equity ETFs.

However, investors should understand that:

• Option premiums are influenced by market volatility
• High distribution yields may come at the expense of capital growth
• Yields can fluctuate depending on option pricing conditions

For this reason, covered call ETFs are often viewed as income-focused strategies rather than long-term growth vehicles.

Best US-domiciled covered call ETFs for Singapore investors

US-listed covered call ETFs represent the deepest and most liquid pool of options-based income products globally. Scale matters here: larger AUM means tighter bid-ask spreads, lower trading friction, and greater capacity for the fund manager to execute large options trades efficiently.

Sources: ETFdb.com and Yahoo Finance (13 Mar 2026)

Critical note for Singapore investors: All US-listed ETFs are subject to a 30% US dividend withholding tax on distributions — applied at source before you receive anything. Meaning, Meaning, on a 10% yield, this leaves approximately 7% yield.

Holdings above USD $60,000 in US-sited assets also create US estate tax exposure. 

JEPI — JPMorgan Equity Premium Income ETF

JEPI invests in a diversified portfolio of lower-volatility U.S. large-cap stocks and overlays written out-of-the-money S&P 500 Index call options to generate monthly distributable income. In practice, the yield comes from two sources: stock dividends plus option premium, and JPMorgan says that since inception the strategy’s rolling 12-month income has averaged about 1.43% from dividends and 7.19% from options premium. The fund’s official 12-month rolling dividend yield was 8.37% as of 28 February 2026.

JEPQ — JPMorgan Nasdaq Equity Premium Income ETF

JEPQ applies the same broad formula to a more growth-heavy portfolio: it invests in U.S. large-cap growth stocks linked to the Nasdaq-100 universe and uses an options overlay to turn some of that volatility into monthly income. That is why its yield is usually higher than JEPI’s: the underlying growth stocks tend to support richer option premiums. JPMorgan’s official fact sheet shows a 12-month rolling dividend yield of 11.16% as of 28 February 2026, and since inception the rolling 12-month income mix has averaged about 0.62% from dividends and 10.27% from options premium.

QQQI — NEOS Nasdaq-100 High Income ETF

QQQI invests in the constituents of the Nasdaq-100 Index and layers on a data-driven call option strategy to produce high monthly income. The yield is therefore driven less by ordinary dividends and more by option-writing on a volatile, tech-heavy index base. On NEOS’s official page, QQQI showed a 12-month trailing distribution rate of 14.27% and a current distribution rate of 14.10% as of 28 February 2026.

QYLD — Global X Nasdaq 100 Covered Call ETF

QYLD is one of the purest “buy-write” products in the market. It buys the stocks in the Nasdaq-100 Index and sells corresponding call options on the same index, which means most of its cash flow comes from option premium rather than dividends. On Global X’s official fund page, QYLD’s trailing 12-month distribution was 12.32% as of 12 March 2026, with distributions paid monthly.

SPYI — NEOS S&P 500 High Income ETF

SPYI invests in the constituents of the S&P 500 Index and implements a data-driven call option strategy to generate monthly income. Relative to Nasdaq-based funds, its underlying portfolio is broader and less concentrated in growth stocks, so the yield tends to be lower than QQQI but still materially above a standard equity ETF because option premiums remain the main income engine. NEOS reported a 12-month trailing distribution rate of 11.86% and a current distribution rate of 12.04% as of 28 February 2026.

IWMI — NEOS Russell 2000 High Income ETF

IWMI is built on the Russell 2000, so it gives investors small-cap U.S. equity exposure and then uses a call option overlay to convert that higher-volatility asset class into monthly income. Small caps are generally more volatile than large caps, and that volatility can support richer option premiums, which helps explain why IWMI’s yield screens near the top of the group. NEOS lists a 12-month trailing distribution rate of 13.66% and a current distribution rate of 14.38% as of 28 February 2026.

IDVO — Amplify CWP International Enhanced Dividend Income ETF

IDVO owns high-quality international large- and mid-cap companies through ADRs with a history of dividend and earnings growth, then writes tactical covered calls on individual securities to add an option-income layer on top of the portfolio’s dividend stream. That makes it one of the more balanced products in this group: a meaningful part of the yield comes from the underlying companies’ dividends, rather than relying almost entirely on index option premium. Amplify said IDVO’s distribution rate was 6.17% as of 31 January 2026; a later issuer yield page showed it around 6.08% as of 28 February 2026.

DIVO — Amplify CWP Enhanced Dividend Income ETF

DIVO holds high-quality U.S. large-cap companies with a history of dividend and earnings growth and sells tactical covered calls on selected individual stocks rather than systematically overwriting the whole portfolio. That structure is why DIVO’s yield is lower than QYLD or QQQI: the fund is designed to preserve more upside and total-return potential, not maximize immediate cash payout. Amplify’s materials say DIVO targets roughly 2%–3% of gross annual income from dividends and 2%–4% from option premiums, and its distribution rate was 4.79% in February 2026.

QDVO — Amplify CWP Growth & Income ETF

QDVO is the more growth-oriented sibling in the Amplify/CWP range. It invests primarily in large-cap growth equities with historically strong earnings and cash flow characteristics and then writes covered calls opportunistically on individual stocks to generate monthly income. Because the underlying portfolio is more growth-heavy and volatile than DIVO’s, the option premiums can be larger, which supports a higher payout profile. Amplify’s official materials showed a 10.18% distribution rate as of 28 February 2026.

XYLD — Global X S&P 500 Covered Call ETF

XYLD follows a straightforward S&P 500 buy-write strategy. It holds stocks in the S&P 500 Index, or investments with similar economic characteristics, and sells corresponding call options on the index to generate monthly distributions. Because it writes calls against a broad U.S. large-cap benchmark rather than a tech-heavy growth index, its yield is usually below QYLD but still substantially higher than a plain vanilla S&P 500 ETF. Global X reported a trailing 12-month distribution of 11.17% as of 12 March 2026.

RYLD — Global X Russell 2000 Covered Call ETF

RYLD applies the same buy-write structure to the Russell 2000, buying the small-cap index exposure and selling corresponding call options to create monthly income. Like IWMI, its small-cap base can support higher option premiums than a typical large-cap fund, although investors also take on the additional volatility and cyclicality of the Russell 2000. Global X’s official page showed a trailing 12-month distribution of 12.81% as of 12 March 2026. 

Best UCITS covered call ETFs — tax-efficient alternative for Singapore investors

UCITS-domiciled ETFs are not a second-choice alternative to US-listed funds — for many Singapore investors, they are the financially superior option. 

The reason is withholding tax: a 30% US dividend withholding tax applies to every distribution from a US-listed ETF. Ireland-domiciled UCITS ETFs benefit from the US-Ireland tax treaty, which reduces the withholding rate at the fund level to 15%.

Ireland imposes no additional withholding on distributions paid to non-residents, meaning Singapore investors pay 15% — and nothing further to IRAS, since Singapore does not tax foreign-source dividend income received in Singapore.

Illustrative estimates. After-tax figures apply withholding tax to the gross distribution only and assume no additional Singapore taxes. Consult a qualified tax professional for individual circumstances.

UCITS covered call ETFs

Sources: JustEtf.com (13 Mar 2026)

A key detail that distinguishes JEPG from its peers: JPMorgan Asset Management registered JEPG with the Monetary Authority of Singapore (MAS), making it the only covered call UCITS ETF formally recognised for distribution to retail investors in Singapore as of March 2026. 

Investing in covered call ETFs from Singapore? 

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Are there any covered call ETFs listed on the SGX?

No. As of March 2026, SGX lists no covered call or buy-write ETFs. The Singapore exchange’s ETF ecosystem is built primarily around broad equity and fixed income indices — the STI, S&P 500, Nasdaq-100, MSCI Asia ex-Japan — rather than derivatives-based income strategies.

Several structural factors explain the absence. SGX’s ETF market remains small relative to global peers — the exchange listed approximately 91 ETFs in 2026, compared to more than 3,000 in the United States. 

Tax implications for Singapore investors

Tax structure is not a footnote for Singapore investors in covered call ETFs — it is one of the most important variables in determining actual after-tax income. Several elements of Singapore’s tax framework interact directly with how these products distribute income.

No capital gains tax in Singapore

Singapore levies no capital gains tax. Any appreciation in the NAV of a covered call ETF is entirely tax-free for Singapore residents. This structural advantage is particularly relevant for ETFs like JEPI and JEPQ, which aim to deliver some equity upside alongside income — none of that capital appreciation is taxable in Singapore..

Dividend Withholding Tax: 30% on US-Listed, 15% on Ireland UCITS

Distributions from US-listed covered call ETFs are classified as dividends and are subject to a 30% US non-resident dividend withholding tax applied at source before you receive payment. Your broker deducts this automatically; you will see the net amount credited to your account.

Ireland-domiciled UCITS ETFs reduce this to 15% through the US-Ireland double tax treaty. The treaty permits Irish-domiciled funds to receive US-source income with a 15% withholding rate rather than the standard 30%. Ireland then pays distributions to non-resident investors with no additional Irish withholding. 

Singapore investors subsequently receive these distributions without further Singapore tax, as IRAS does not tax foreign-source dividends remitted to Singapore.

US estate tax risk

US-domiciled ETFs are classified as US-sited assets. Non-US persons (including Singapore residents) are subject to US federal estate tax on US-sited assets exceeding USD $60,000 at death. Estate tax rates on the excess can reach 40%. 

Ireland-domiciled UCITS ETFs are not US-sited assets. Singapore investors holding JEPG, QYLE, or XYLP through a European exchange carry no US estate tax exposure. 

Investors with substantial positions in US-listed ETFs should discuss estate planning with a qualified advisor who has cross-border tax expertise.

How option premium income is treated in Singapore

For Singapore investors, option premiums collected by a covered call ETF are embedded within the fund’s monthly distribution — you receive them as a combined income payment. 

Since Singapore’s IRAS exempts foreign-source dividend income received in Singapore from personal income tax, and since no capital gains tax exists, the after-tax framework is relatively clean: 

withholding tax is deducted at source (30% US or 15% UCITS), and no further Singapore tax liability arises on the distribution itself.

How to buy covered call ETFs in Singapore

Once you’ve identified the covered call ETF that fits your income strategy, the next decision is where to buy it. The platform you choose affects your overall investment cost, access to global exchanges, FX conversion spreads, and the tax structure of the ETFs available to you.

Because many covered call ETFs are listed on U.S. exchanges or European UCITS exchanges, Singapore investors typically need a brokerage platform that provides international market access.

Local bank brokerages

Traditional platforms such as DBS Vickers, OCBC Securities, and UOB Kay Hian remain widely used by Singapore investors due to their strong customer support and seamless integration with existing bank accounts.

These brokerages allow investors to buy global ETFs, including covered call ETFs listed in the United States.

However, commissions on these platforms tend to be higher than newer fintech brokers, and minimum charges can significantly reduce returns for smaller trades. Accessing U.S. markets through bank-backed brokerages may also involve higher FX spreads and additional custody fees.

Global and fintech brokers

Platforms such as Interactive Brokers, Saxo Markets, Tiger Brokers, Moomoo SG, and FSMOne have significantly lowered the cost of accessing global ETF markets.

These brokers typically offer:

• lower trading commissions
• tighter FX conversion spreads
• direct access to U.S., European, and Hong Kong exchanges

This is particularly important for covered call ETF investors, since many of the largest funds — including JEPI, JEPQ, QYLD, and SPYI — are listed in the United States.

Some brokers also allow access to UCITS equivalents listed in London or European exchanges, which can offer tax advantages for non-U.S. investors.

The trade-off is that investors must manage their own portfolio decisions, currency conversions, and tax considerations when investing through these platforms.

Robo-advisors and managed platforms

Robo-advisors offer a different approach by combining portfolio management with simplified ETF access.

Some platforms now provide hybrid models where investors can either invest through managed portfolios or purchase individual ETFs.

StashAway’s ETF Explorer is an example of this approach.

Platform comparison

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Why some investors may prefer StashAway ETF Explorer

For Singapore investors who want the simplicity of a robo-advisor while still retaining the flexibility to choose individual ETFs, StashAway’s ETF Explorer offers a streamlined way to access global ETFs — including income-focused strategies such as covered call ETFs.

ETF Explorer curates a selection of ETFs across equities, bonds, commodities, and thematic exposures. Instead of navigating thousands of global ETFs, investors can browse a filtered universe that has been reviewed by StashAway’s investment team for liquidity, cost efficiency, and tax considerations.

The platform also allows investors to explore ETFs by asset class and strategy, helping users understand how different funds fit into their broader portfolio.

One of ETF Explorer’s key advantages is its flat $1 USD per trade fee, with no additional management fee when purchasing ETFs individually. Combined with competitive FX spreads, this predictable cost structure allows investors to keep more of their capital invested rather than paying high brokerage commissions.

Investors can fund their ETF Explorer portfolios using cash or SRS, making it suitable both for long-term asset allocation and tactical ETF exposure.

Once funded, purchasing an ETF typically takes only a few steps — from logging in with SingPass to executing a trade — significantly reducing the friction that often comes with accessing global ETF markets.]

Covered call ETFs vs dividend ETFs

Singapore investors often compare covered call ETFs with dividend ETFs when looking for income-generating investments. While both provide regular distributions, the source of income, growth potential, and long-term return profile differ significantly.

Covered call ETFs generate income primarily by selling call options on an equity portfolio, while dividend ETFs distribute cash dividends paid by companies.

Key differences

Illustrative comparison. Actual results vary depending on market conditions, ETF selection, and individual tax circumstances.

Why the yield difference exists

The yield gap between these strategies is substantial. Covered call ETFs such as JEPI may distribute yields in the high single digits, while most broad dividend ETFs typically yield 3–5%.

However, the mechanisms behind those yields differ.

Dividend ETFs hold companies that generate profits and distribute a portion of those earnings as dividends. Over time, as corporate earnings grow, both the share price and dividend payments can increase, contributing to long-term capital appreciation.

Covered call ETFs, by contrast, convert part of the equity market’s potential upside into current income through option premiums. The strategy effectively trades some long-term capital growth for higher immediate cash flow.

Long-term compounding considerations

Because dividend ETFs do not cap equity upside, they tend to participate fully in long-term market growth.

Over multi-decade periods, strategies that allow uncapped equity appreciation have historically produced higher total returns than systematic covered call strategies.

This does not mean covered call ETFs are inferior — they simply serve a different objective. Covered call ETFs prioritise income generation, while dividend ETFs typically prioritise income plus capital growth.

Which investors each strategy suits

Covered call ETFs may be more suitable for investors who:

• prioritise higher income today
• prefer monthly distributions
• are comfortable sacrificing some upside participation

Dividend ETFs may be more appropriate for investors who:

• are focused on long-term wealth accumulation
• want income that can grow alongside corporate earnings
• prefer full participation in equity market rallies

In practice, many portfolios combine both approaches — using dividend ETFs as a core equity holding and covered call ETFs as a supplemental income allocation.

Risks investors should understand

Covered call ETFs can generate attractive income, but the yield is not free. The 8–12% headline distribution typically reflects option premium income, which comes with structural trade-offs that investors should understand before allocating capital.

Capped upside during strong bull markets

The most important structural limitation of covered call ETFs is capped upside during strong market rallies.

Because the fund sells call options on its holdings, it may have to sell those shares at the strike price if markets rise beyond that level. This limits how much of a market rally the ETF can capture.

For example, when the S&P 500 rose roughly 25% in 2023, buy-write funds such as XYLD — which sells call options on the index each month — captured only a portion of that gain.

Even more flexible strategies such as JEPI and JEPQ, which typically write out-of-the-money options, tend to lag their underlying indices during sustained bull markets.

This trade-off is visible in long-term performance. JEPI’s five-year annualised return has been around 9–10%, compared with roughly 14–16% for the S&P 500 over a similar period.

Investors should therefore view the distribution yield as a substitute for some equity upside, rather than an additional source of return on top of full market exposure.

Income variability and volatility dependence

Covered call ETF distributions are not fixed income.

Option premiums — which form a large part of the distribution — depend heavily on implied market volatility, commonly measured by the VIX.

When volatility rises, option premiums increase and covered call ETFs may generate higher income. During calm markets, option premiums shrink and distributions may fall.

In prolonged low-volatility environments, monthly distributions can decline meaningfully compared with periods of elevated market volatility.

Investors relying on these ETFs for regular cash flow should recognise that distributions can fluctuate depending on market conditions.

Capital erosion in aggressive buy-write strategies

Some covered call ETFs follow aggressive at-the-money buy-write strategies, meaning they sell call options on the entire portfolio at or near the current market price.

Examples include funds such as QYLD and RYLD, which systematically sell calls on the Nasdaq-100 and Russell 2000 respectively.

Because these strategies prioritise income generation over capital growth, they can experience gradual NAV erosion over long periods, particularly during strong equity bull markets.

Part of the distribution investors receive may effectively represent return of capital, where a portion of the fund’s assets is distributed as income.

For this reason, investors should monitor both distribution yield and NAV trends, rather than focusing solely on headline yield.

No SDIC protection

Covered call ETFs are market investments, not bank deposits.

Unlike Singapore fixed deposits, which are protected by the Singapore Deposit Insurance Corporation (SDIC) up to SGD $100,000 per depositor per bank, ETF investments do not carry deposit insurance.

Their value fluctuates with financial markets, and investors may experience capital losses during market downturns.

Covered call ETFs may provide income, but they still remain equity-linked investments with market risk.

Who should consider covered call ETFs?

Covered call ETFs are designed for a specific type of investor. While their high distribution yields can be attractive, the strategy involves trade-offs — particularly reduced upside participation during strong equity bull markets.

Understanding when these funds are appropriate is therefore essential before allocating capital.

Income-focused investors

Covered call ETFs are most naturally suited to income-oriented investors who prioritise regular cash distributions over maximum capital growth.

Because these funds generate income from option premiums and dividends, many of them distribute monthly payouts, which can help investors create a predictable income stream from their portfolio.

For investors who require regular cash flow — such as retirees or those supplementing employment income — covered call ETFs can provide equity market exposure while producing a relatively high level of income compared with traditional dividend ETFs.

Investors seeking higher yield than traditional fixed income

Covered call ETFs may also appeal to investors looking for income alternatives to traditional fixed-income assets.

For example, yields on Singapore Treasury bills and other short-duration instruments fluctuate with interest rates and have fallen significantly during certain periods. Covered call ETFs typically offer higher distribution yields because option premiums are embedded within their payouts.

However, it is important to recognise that these funds still carry equity market risk, which means they should not be treated as direct substitutes for government bonds or cash instruments.

Investors expecting sideways or moderately rising markets

Buy-write strategies tend to perform best in markets that are range-bound or gradually rising.

In these environments, covered call ETFs can collect option premiums while the underlying equity portfolio remains relatively stable. Because the strategy continuously sells call options, it can generate income even when markets are not delivering strong capital gains.

For investors who expect equity markets to move sideways for an extended period, covered call ETFs may serve as a useful tactical allocation.

Investors with shorter income horizons

Covered call ETFs may also fit investors with medium-term income objectives, where generating cash flow is more important than maximising long-term capital appreciation.

Because the strategy converts part of the equity market’s potential upside into income, it can provide a balance between income generation and equity exposure for investors who are already in the income phase of their portfolio lifecycle.

Who should think twice

Covered call ETFs may be less suitable for investors with very long investment horizons and no immediate need for income.

Younger investors focused on long-term wealth accumulation typically benefit more from full equity market participation, where the compounding effect of capital appreciation can significantly outweigh the income generated by option-selling strategies.

Over multi-decade periods, traditional broad-market equity ETFs have historically delivered higher total returns than buy-write strategies because they do not cap upside during strong bull markets.

For these investors, covered call ETFs may be more appropriate as a satellite income allocation rather than a core long-term holding.

Bottom-line: The role of covered call ETFs in a Singapore portfolio

Covered call ETFs solve a very specific problem: how to turn equity exposure into predictable cash flow.

In a world where Singapore T-bill yields have fallen sharply from their 2024 highs and traditional income assets are again offering modest returns, the appeal of an 8–12% distribution yield is obvious. Products such as JEPI, JEPQ, QYLD and SPYI have grown rapidly because they convert stock market volatility into monthly income in a way that individual investors previously had to implement manually through options trading.

But the trade-off is not subtle. Covered call ETFs are effectively selling part of the stock market’s future upside in exchange for income today. That trade can make perfect sense for investors who prioritise cash flow — retirees, income-focused portfolios, or investors already in the distribution phase of their financial lifecycle.

For long-term wealth accumulation, however, they are rarely the optimal core holding. Over multi-decade horizons, strategies that fully participate in equity market appreciation have historically delivered higher total returns than systematic buy-write approaches.

For Singapore investors specifically, the real optimisation question is not whether covered call ETFs work — they clearly do — but how to structure them efficiently. Tax drag and estate tax exposure can materially change the economics. In many cases, UCITS equivalents with lower withholding tax will produce higher after-tax income despite slightly lower headline yields.

Used correctly, covered call ETFs should therefore be viewed not as replacements for equity ETFs, but as a specialised income allocation within a broader portfolio — one that converts market volatility into regular cash flow while the rest of the portfolio continues compounding.

For investors who understand that trade-off and use the strategy deliberately, covered call ETFs can be one of the most practical tools available today for generating monthly income from global equity markets.