Covered call ETFs paid some of the highest yields in the fund market in 2026 and trailed their benchmarks by wide margins on total return. As of August 31, 2026, the JPMorgan Equity Premium Income ETF (JEPI) had a 30 day SEC yield of 7.44% and a year to date return of 5.36% at net asset value, against 13.14% for the S&P 500; the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) yielded 13.32% and returned 10.97%, against 17.14% for the Nasdaq-100 [1][2]. The Global X Nasdaq 100 Covered Call ETF (QYLD) returned 24.37% at NAV over the year to June 30, 2026 [3]. The pattern is the design working as intended: selling calls converts part of the upside into monthly cash, and in a rising market that trade costs return.
How covered call ETFs generate income
All three funds own a stock portfolio and sell call options against it. JEPI and JEPQ build the equity side actively, JEPI as a lower volatility large cap portfolio and JEPQ as a data driven portfolio of Nasdaq-100 type stocks, and they sell one month, out of the money index call options to generate income that is paid monthly along with dividends [1][2]. QYLD follows an index, the Cboe Nasdaq-100 BuyWrite V2 Index, which buys the Nasdaq-100 stocks and writes corresponding call options on the index [3]. The option premium is the yield. It rises when volatility rises and when the fund's stocks are more volatile, which is why JEPQ's 13.32% SEC yield is far above JEPI's 7.44%: JEPQ's portfolio had 48.5% in information technology and 7.3% in Nvidia (NVDA) alone as of August 31, 2026, while JEPI's largest position, Microsoft (MSFT), was 2.0% [1][2].
| Metric (August 31, 2026) | JEPI | JEPQ | QYLD |
|---|---|---|---|
| Expense ratio | 0.35% [1] | 0.35% [2] | 0.60% [3] |
| 30 day SEC yield | 7.44% [1] | 13.32% [2] | n/a |
| 12 month rolling dividend yield | 8.04% [1] | 11.21% [2] | n/a |
| YTD total return (NAV) | 5.36% [1] | 10.97% [2] | n/a |
| Benchmark YTD | S&P 500: 13.14% [1] | Nasdaq-100: 17.14% [2] | n/a |
| 1 year total return (NAV) | 9.05% [1] | 20.91% [2] | 24.37% (to June 30) [3] |
| Assets | $46.16 billion [1] | $42.21 billion [2] | n/a |
| Inception | May 20, 2020 [1] | May 3, 2022 [2] | December 11, 2013 [3] |
Income versus total return: the 2026 and multi year record
The yield figures need a second look. A 12 month rolling dividend yield of 8.04% for JEPI means the fund paid out about 8% of its share price over the past year, but its total return over the year to August 31 was 9.05%, so almost all of the return arrived as cash and the share price barely moved [1]. For JEPQ the split was healthier: 11.21% of distributions inside a 20.91% total return [2]. In both cases the benchmark did better on total return, 20.38% for the S&P 500 and 26.61% for the Nasdaq-100 over the same year [1][2].
Where the strategy earns its keep
The calendar year record shows the trade off clearly. In 2022, when the S&P 500 fell 18.11%, JEPI lost 3.54%, a cushion of more than 14 points [1]. In the three strong years that followed, JEPI returned 9.88%, 12.56% and 8.07% against 26.29%, 25.02% and 17.88% for the index [1]. JEPQ's shorter history tells the same story at higher amplitude: 36.28% in 2023 versus 55.13% for the Nasdaq-100, 24.82% versus 25.88% in 2024, and 15.19% versus 21.02% in 2025 [2]. Over three years to June 30, 2026, JEPI returned 8.99% annualized against 20.61% for the S&P 500, and JEPQ 20.40% against 26.83% for the Nasdaq-100 [1][2].
Comparison with a plain dividend fund is useful. The Vanguard High Dividend Yield ETF (VYM) paid $3.63 per share in the four quarters through June 18, 2026, a 2.20% trailing yield on its September 3, 2026 close of $164.89, according to DataPorium's ETF data [4]. Covered call ETFs pay three to six times that yield, but the extra income is option premium, which is a sale of future gains rather than a share of company profits.
What investors give up, and who the funds suit
- Capped upside. When the index rallies past the call strike inside a month, the fund keeps the premium but not the gain; that is the source of the 2023 to 2025 shortfalls [1][2].
- Full downside beyond the premium. The 2022 cushion was about 14 points for JEPI, not a floor; a 30% market decline would still produce a large loss [1].
- Tax character. Income from option writing is generally taxed as ordinary income rather than as qualified dividends, so the funds fit best in tax deferred accounts.
- Cost. At 0.35% for the JPMorgan funds and 0.60% for QYLD, fees are several times those of index ETFs, though modest against yields near 8% to 13% [1][2][3].
- Distribution stability. Payouts track option premiums, so they fall when volatility falls; the 12 month rolling yield is the better guide than a single month annualized [1][2].
The economic case is for investors who need monthly cash flow and accept lower long run growth to get it, for example retirees who would otherwise sell shares each month. The counterpoint is that a total return investor could hold the underlying index fund and sell a fixed percentage each month, keeping the upside and paying capital gains rates instead of ordinary income rates. Investors may consider the size of the covered call sleeve in light of how much growth they are willing to trade for a smoother income stream.
Covered call ETFs deliver the income they advertise, and the price of that income in 2026 was five to eight points of total return relative to the indexes they draw from.
Key takeaways
- As of August 31, 2026, JEPI yielded 7.44% and JEPQ 13.32% on a 30 day SEC basis, with 12 month rolling yields of 8.04% and 11.21% [1][2].
- Year to date total returns were 5.36% for JEPI and 10.97% for JEPQ, versus 13.14% for the S&P 500 and 17.14% for the Nasdaq-100 [1][2].
- JEPI lost only 3.54% in 2022 against an 18.11% index decline, then trailed by 12 to 16 points in each of the next three years [1].
- QYLD tracks a Nasdaq-100 buy write index, costs 0.60% and returned 24.37% at NAV over the year to June 30, 2026 [3].
- A plain dividend fund such as VYM yielded about 2.20%, so most covered call income is option premium rather than dividends [4].
Frequently asked questions
Is JEPI a good investment for income in 2026?
JEPI paid a 12 month rolling dividend yield of 8.04% as of August 31, 2026, with a 7.44% SEC yield, but its total return of 5.36% year to date was well below the S&P 500's 13.14%, so it suits investors who prioritize monthly cash over growth [1].
What is the difference between JEPI and JEPQ?
JEPI holds a lower volatility S&P 500 type portfolio and sells S&P 500 calls; JEPQ holds Nasdaq-100 type stocks with 48.5% in technology and sells Nasdaq-100 calls, producing a higher yield (13.32% versus 7.44%) and higher volatility [1][2].
Why is QYLD's yield so high?
QYLD follows the Cboe Nasdaq-100 BuyWrite V2 Index, which buys the Nasdaq-100 stocks and writes call options on the whole index, so the option premium becomes distributable income at the cost of upside above the strike [3].
Do covered call ETFs lose value over time?
They can lag in rising markets because gains above the call strike are given up; JEPI's price barely changed over the year to August 31, 2026 while it paid out about 8%, and its total return was 9.05% versus 20.38% for the index [1].
