7 Top Covered Call ETFs to Buy in 2026

This structure gives this ETF two key tax advantages. First, SPX index options fall under Section 1256 of the tax code, meaning gains are taxed on a 60/40 split — 60% long-term, 40% short-term — regardless of the holding period, often resulting in a lower effective tax rate.

Second, because of how the fund manages its options and capital gains, a significant portion of its yield is classified as a return of capital, which is tax-efficient because it reduces your cost basis rather than generating immediate taxable income.

While it carries a slightly higher 0.68% expense ratio, the fund’s performance since its August 2022 inception has been strong. It delivered a 12.66% annualized return, outpacing the CBOE S&P 500 BuyWrite Monthly index, which returned 10.32% over the same period.

This ETF may appeal to investors looking for tax-smart high income without giving up entirely on growth potential, as well as to those who are comfortable with a newer fund.

6. NEOS Nasdaq-100 High Income ETF

This covered call ETF passively holds stocks from the Nasdaq-100, allowing for tax-loss-harvesting opportunities, while actively managing an options overlay using NDX index options, which, like SPX, are Section 1256 contracts. Given the Nasdaq-100’s higher volatility, the NEOS Nasdaq-100 High Income ETF (QQQI +0.08%) can generate larger option premiums, which explains its elevated yield.