Forget JEPI: This Covered Call ETF Yields Over 12% With Less NAV Erosion

Quick Read

JPMorgan Equity Premium Income (JEPI) returned 10.5% over the past year while the S&P 500 gained 20.1%, with its options structure capping upside to fund an 8% monthly yield. NEOS S&P 500 High Income (SPYI) uses call spreads instead to deliver 19.9% returns and a 7.6% yield on $45 billion in assets, while NEOS Nasdaq-100 High Income (QQQI) applied the same strategy to tech-heavy exposure with a 24.1% return over the past year. SPYI and QQQI spread-based structures allow greater market participation than JEPI’s outright covered call approach, demonstrating a structural advantage in rising equity markets that translates to stronger total returns for income investors. A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.

Most income investors who discovered covered call ETFs found JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) first. It pays monthly, yields around 8%, and carries JPMorgan's name. The problem is that JEPI's structure quietly costs investors in rising markets, and a newer fund from NEOS has spent the past year demonstrating a better approach.

What JEPI Actually Does (And Where It Falls Short)

JEPI generates income by selling equity-linked notes tied to S&P 500 options. The premium from those notes is what funds the monthly distribution. But this structure caps how much of any market rally JEPI can capture. When the S&P 500 runs hard, JEPI's NAV lags because the options overlay surrenders the upside in exchange for income. Over the past year, JEPI returned 10.5% on a price basis while SPY returned 20.1% over the same period. That gap is the structural cost of the strategy.

SPYI Takes a Different Approach

NEOS S&P 500 High Income ETF (NYSEARCA:SPYI) uses a spread-based options strategy rather than selling calls outright. Instead of capping upside entirely, SPYI uses call spreads on the S&P 500 index, which allows more participation in rallies while still generating meaningful premium income. The result over the past twelve months tells the story: SPYI returned 19.9% on a price basis, nearly matching the S&P 500's 20.1% gain, while JEPI trailed by nearly 10 points.

Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement

Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.

SPYI's 7.6% dividend yield is slightly lower than JEPI's 8.2%, but the spread-based structure allows SPYI to recover more of that gap through NAV appreciation — a dynamic that showed up clearly over the past year. For income investors, total return is the more complete scoreboard. The tradeoff between yield and total return is a key consideration when comparing these funds.

Story Continues

SPYI holds $45 billion in net assets and charges 0.35% in expenses, making it one of the larger and more cost-efficient options-income funds in the category — meaning less drag on total return, and its scale reflects the breadth of investor adoption since launch.

For Growth-Oriented Income Seekers: QQQI

Investors comfortable with more volatility have a second NEOS option. NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI) applies the same spread-based strategy to the Nasdaq-100, which carries heavier tech concentration but historically stronger long-term growth. QQQI launched in January 2024, so its track record is short, but the past year showed a 24.1% price return. The fund charges 0.68% in expenses and carries $8.9 billion in assets. QQQI targets investors who want income alongside Nasdaq-100 exposure.

Why This Market Environment Favors These Funds Right Now

The current setup is unusually favorable for options-income strategies. The VIX sits around 27.29, up from a month ago, which pushes option premiums higher and makes income generation more efficient. With the S&P 500 down year-to-date and the market choppy, covered call strategies are outperforming pure equity exposure because the income cushions the drawdown. SPYI is down just 1.9% year-to-date versus SPY's 2.9% decline.

The 10-year Treasury at 4.27% also matters here. SPYI's 7.6% yield represents a meaningful premium over risk-free rates, which provides context for comparing equity-income strategies against risk-free alternatives.

The Tradeoffs Worth Understanding

Neither SPYI nor QQQI is a free lunch. The spread strategy that preserves more upside also generates somewhat less premium than a pure covered call in flat or declining markets. QQQI's Nasdaq concentration means a tech sector correction hits harder than it would in a broad S&P 500 fund. And both funds are young enough that their track records do not include a full bear market cycle, which matters for anyone relying on them for retirement income.

SPYI is structured for S&P 500 exposure with a 7.6% yield, with NAV fluctuation as part of the strategy. JEPI uses a different structure favored by conservative income-focused investors, while SPYI offers a spread-based approach for those researching S&P 500 income alternatives.

Data Shows One Habit Doubles American’s Savings And Boosts Retirement

Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.

And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.

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