Friends, the market’s on a wild ride these days. Tech’s in a tailspin, the Fed’s playing a game of chicken with interest rates, and everyone’s whispering about a recession lurking around the corner. It’s enough to make even the most seasoned investor sweat.
But guess what? There is a way to ride out this storm and still keep that income stream flowing – and it’s called covered call ETFs. These bad boys provide high yields, lower volatility, and built-in protection against market downturns. Sound too good to be true? Read on…
Why Covered Call ETFs?
Covered call ETFs generate income by selling call options on the stocks they hold. It’s a time-tested strategy that turns market volatility into your advantage, providing a nice cushion when things get bumpy. Think of it as insurance for your portfolio!
Here are 4 covered call ETFs that should be on every income investor’s radar, especially with recession fears bubbling up…
1. JPMorgan Equity Premium Income ETF (JEPI)
JEPI is the big daddy of covered call ETFs, with over $35 billion in assets. This fund sells out-of-the-money call options on S&P 500 stocks – basically, blue-chip companies that are built to last.
Why I Like It: JEPI has a solid 6.4% 30-day SEC yield, according to U.S. News & World Report. Even better, they pay out monthly, letting you build that income stream without waiting around!
As Forbes Advisor points out, this fund tends to underperform during roaring bull markets, but it’s a champion of protection when things head south. And we all need a little defense these days, don’t we?
2. JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
This fund is JEPI’s tech-focused cousin, selling covered calls on Nasdaq stocks. It’s a little riskier than JEPI, but the potential rewards are juicy.
Why I Like It: Tech is in a correction right now, and that creates opportunity for JEPQ to scoop up bargains. With a relatively lower expense ratio compared to some other actively managed funds, it's a good option for longer-term investors who believe in the tech sector's future.
3. Amplify CWP Enhanced Dividend Income ETF (DIVO)
DIVO uses a covered call strategy to enhance the income from an already strong dividend portfolio. They focus on companies known for consistent dividend growth – the kind of steady performers you want in your corner during a recession!
Why I Like It: This ETF is a real income machine, with a current yield of about 4.5%, and some Redditors have even shown it outperforming the S&P 500 when dividends are factored in! They say nothing beats a historical track record, and DIVO is making a convincing case for itself.
4. Global X Nasdaq 100 Covered Call ETF (QYLD)
QYLD is for investors who want maximum income – and are willing to take on a little more risk. It sells covered calls on the Nasdaq 100, which means both big upswings and downswings can occur.
Why I Like It: QYLD's strategy is particularly interesting given the current state of tech stocks. With many tech giants experiencing a correction, QYLD can potentially capitalize on volatility to generate even higher premiums, enhancing its income potential.
The Bottom Line: Covered call ETFs are a smart way to generate consistent income without betting the farm on market direction. These 4 funds offer a range of options — from low volatility stalwart JEPI to growth-oriented JEPQ. With recession warnings flashing, now’s the time to get this strategy working for YOU!
Action Plan: Do your research on these 4 covered call ETFs, and see if one is right for your portfolio. Remember, a diversified approach is always the safest bet!
Tomorrow we're diving deep into the world of hidden gems – I’ll reveal a tiny international dividend stock paying over 8% that most “experts” ignore. You won’t want to miss this!
