We Did the Math on What $100,000 Earns in 4 Covered Call ETFs. The Gap Is $4,632 a Year
Four covered call ETFs all promise monthly income from the same basic strategy, yet the one writing the biggest checks finished near the bottom on total return while a fund paying less left it behind by a wide margin.
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If you put $100,000 into each of four widely held covered call ETFs, one fund at a time, the annual income runs from $10,453 to $15,085. These figures use trailing twelve-month distributions against prices on October 19, 2026.
On that basis, the NEOS Russell 2000 High Income ETF (CBOE:IWMI) pays $4,632 a year more than the Global X S&P 500 Covered Call ETF (NYSEARCA:XYLD). The Global X Russell 2000 Covered Call ETF (NYSEARCA:RYLD) and the Global X Nasdaq 100 Covered Call ETF (NASDAQ:QYLD) land in between. The fund that paid the most ranked behind two others on total return.
How Covered Call Funds Turn Market Swings Into Monthly Cash
A covered call means holding stocks and selling someone else an option to purchase them at a set level, called the strike price. Up front, the fund takes in payment for that option. This payment is the option premium, and it covers the monthly distributions.
Volatility drives how big the premium is. When an index moves hard, buyers pay more for calls, so a fund writing on a bumpy index brings in more cash. There is a cost. If the index rises above the strike, the fund forgoes any gains beyond that level. All four funds pay monthly, with 12 distributions each over the past year, and the amounts change from month to month.
IWMI Pays $1,257 a Month While Keeping Some Small-Cap Upside
IWMI paid the most, with a trailing yield of 15.1%. That works out to $1,257 a month on the stated amount. Its one-year total return was 13%.
The fund is actively managed. It holds the Vanguard Russell 2000 Index Fund at about 99% of assets and sells Russell 2000 index calls at more than one strike, including November contracts at 2875 and 2925. An analysis by Nicholas Bratto, republished by Grit Capital, describes the overlay as “out-of-the-money”, with some calls bought back to capture upside. Because the strikes sit above the market, the fund keeps part of any small-cap rally.
NEOS sells the fund on tax-efficient income. Under 26 U.S.C. § 1256(a)(3), gains on these index options generally receive blended long-term and short-term capital gain treatment. RYLD also writes index options, though, so the tax rule applies to both funds. Strategy separates the two funds. On costs, IWMI has a 0.68% net expense ratio, compared with 0.60% at each Global X fund.
RYLD Covers the Same Index but Caps the Gains
RYLD trails IWMI in a direct comparison. It sells calls on the same Russell 2000 Index and tracks the Cboe Russell 2000 BuyWrite Index, which writes one-month at-the-money calls against the whole portfolio. It yielded 12.4%, or $1,035 a month.
Writing at the money on every share brings in regular premium, but the fund keeps almost nothing when small caps rally. That trade-off shows up in its 11% one-year total return, the worst of the four. IWMI and RYLD start from the same index. The amount of the portfolio covered and the strikes sold explain why their results differ.
QYLD Earns Rich Nasdaq-100 Premiums and Posted the Best Return
QYLD writes calls on the Nasdaq-100 and tracks the Cboe Nasdaq-100 BuyWrite V2 Index. Its top holdings include NVIDIA at about 8% and Apple at about 8%. The yield came to 11.7%, or $971 a month.
QYLD paid the third-highest income, yet it led on total return at 20%. Strong gains in its tech-heavy holdings helped support the share price even with the full overlay. At $8.4 billion in net assets, it is also the largest fund here.
XYLD Pays the Least but Holds About 500 Companies
XYLD tracks the Cboe S&P 500 BuyWrite Index across 505 holdings. The S&P 500 moves less than the Nasdaq-100 or small caps, so its premiums are smaller. The fund yielded 10.5%, or $871 a month, and its one-year total return was 17%.
Recent payments have also slowed. XYLD’s annualized forward distribution of $3.56 per share is below its trailing total of $4.32, so the trailing yield exaggerates what the fund is paying now.
Why the Biggest Check Did Not Deliver the Best Result
The income ranking and the return ranking vary.
| Fund | Trailing Yield | Annual Income on $100,000 | Monthly Income | One-Year Total Return |
|---|---|---|---|---|
| IWMI | 15.1% | $15,085 | $1,257 | 13% |
| RYLD | 12.4% | $12,416 | $1,035 | 11% |
| QYLD | 11.7% | $11,651 | $971 | 20% |
| XYLD | 10.5% | $10,453 | $871 | 17% |
Both small-cap funds paid the most and returned the least. The two large-cap funds paid less and came out ahead. Selling calls more heavily, or on a more volatile index, brings in more premium but gives up more of the upside. When a payout is partly funded with capital, the share price tends to fall. A distribution rate is a cash-flow measure, and total return is what tells you whether your money grew. Treat one year of results as a description of the past, since it says little about what comes next.
Return of Capital and What Happened to Share Prices
Global X says that its fund distributions “may contain return of capital” (Global X). Return of capital is your own money coming back to you. It brings down your cost basis and can make a payout look larger than what the fund actually earned. Check each fund’s own tax documents for the details. A double-digit distribution rate always needs a second look (we laid out the warning signs that a big yield is funded with something other than earnings in a free report on dividend traps). Covered call income still comes out of a portfolio exposed to the full drop in stock prices.
Share prices show the difference over time. With distributions included, RYLD’s adjusted price rose just 10% over five years. QYLD rose 50%, and XYLD rose 44% over the same stretch.
IWMI launched in June 2024 and now trades near $48. Its forward payout of $7.29 per share is about in line with its trailing total. RYLD’s forward rate of $1.77 is below its trailing figure.
Which Covered Call ETF Fits Your Income Plan
IWMI offers small-cap income while keeping some of the upside. Compared side by side, it delivered more income and a higher one-year return than RYLD. QYLD pairs its income with heavy tech exposure, and it delivered the best total return here. XYLD is the most diversified of the four, trading a smaller check for broad large-cap exposure.
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