Covered Call ETFs: Choosing the Optimal Income Strategy in 2025

In 2025, income-focused investors face a critical decision: balancing the allure of high yields with the risks of volatility and capped growth potential. Covered call ETFs, which generate income by selling options on underlying equities, have emerged as a compelling solution. However, not all strategies are created equal. This analysis evaluates four leading contenders-Goldman Sachs Nasdaq-100 Premium Income ETF (GPIQ), Invesco QQQ Income Advantage ETF (QQA), JPMorgan Nasdaq Equity Premium Income ETF (JEPQ), and NEOS Nasdaq-100 High Income ETF (QQQI)-to determine which best aligns with the dual goals of income generation and long-term capital appreciation.

Performance: Growth vs. Income

The performance landscape reveals stark contrasts. GPIQ has outpaced its peers in recent periods, delivering a 17.99% total return over 12 months and a 20.95% year-to-date (YTD) return, supported by its dynamic covered-call strategy that adjusts exposure between 25% and 75% of equity holdings. This adaptability has enabled GPIQ to capitalize on both bullish and volatile markets, as evidenced by its rapid recovery from a market dip in April 2025.

QQA, meanwhile, offers a more moderate 16.60% annualized return as of November 2025, while JEPQ lags with a 12.44% one-year return but shines over a three-year horizon at 24.5% as reported. QQQI, the highest-yielding option, has delivered a 20.80% annualized return since its 2024 inception, though its three-year performance is flat at 0.00% as shown. These figures underscore a key trade-off: QQQI's aggressive call-writing strategy maximizes income but limits upside potential during sustained bull markets.

Yield and Expense Efficiency

Yield remains a primary draw for income investors, but it must be weighed against cost. GPIQ and QQA offer competitive yields of 9.8% and 9.59%, respectively, with identical expense ratios of 0.29% according to data. JEPQ provides a slightly higher yield of 10.17% at a 0.35% expense ratio as reported, while QQQI's 13.29% yield comes at a steep 0.68% cost according to analysis.

The disparity in expense ratios reflects differing strategies. GPIQ and QQA employ active management with lower fees, whereas QQQI's reliance on equity-linked notes (ELNs) to simulate covered call writing adds complexity and cost according to financial analysis. For investors prioritizing cost efficiency, GPIQ and QQA are clear advantages, but QQQI's yield may justify its higher fees for those prioritizing income over capital preservation.

Risk Profiles: Volatility and Strategy Trade-Offs

Volatility metrics highlight divergent risk profiles. GPIQ's annualized volatility stands at 3.11%, significantly lower than QQQI's 15.79% as noted, though its implied volatility of 14.33% suggests market expectations of higher near-term swings according to options data. JEPQ's volatility data is inconsistent, ranging from 3.54% to 17.63% as reported, likely due to its ELN-based strategy, which introduces additional layers of complexity according to financial analysis. QQA's volatility is moderate, with 20-day and 200-day measures at 14.52% and 10.77%, respectively as shown.

These variations reflect strategic differences. GPIQ's dynamic coverage model mitigates downside risk during corrections, while QQQI's aggressive call-writing strategy exposes it to higher volatility and potential income compression during market rallies according to market analysis. JEPQ's ELN structure, though designed to reduce volatility, introduces counterparty risk and liquidity concerns according to financial reports. For risk-averse investors, GPIQ's balanced approach appears most attractive.

Capital Appreciation Potential

Long-term growth hinges on the ability to retain upside exposure. GPIQ's strategy of adjusting covered-call coverage allows it to maintain equity exposure during bull markets, as seen in its 35% total return since inception in October 2023. QQA's performance is similarly robust, though its 16.60% annualized return trails GPIQ's 27.71% average since inception as calculated. JEPQ's 24.5% three-year return as reported suggests resilience, but its 12.44% one-year return lags behind GPIQ's 17.99% as shown. QQQI's 20.80% annualized return since 2024 is impressive as noted, yet its flat three-year performance raises concerns about sustainability.

Conclusion: Balancing Income and Growth

The optimal choice depends on investor priorities. For those seeking a balance of income, growth, and cost efficiency, GPIQ emerges as the top contender. Its low expense ratio, strong returns, and adaptive volatility management position it as a versatile option for both income and capital appreciation. QQA is a close second, offering similar yields and moderate risk but lacking GPIQ's dynamic strategy. QQQI, while tempting with its 13.29% yield, demands a higher risk tolerance and acceptance of elevated costs and volatility. JEPQ, with its inconsistent volatility metrics and moderate returns, suits investors prioritizing income over growth but may fall short in volatile environments.

As 2025 unfolds, GPIQ's ability to navigate market cycles while generating consistent income makes it a standout choice for investors seeking to harmonize yield and long-term growth.