A new type of exchange-traded fund is gaining popularity in sync with retail’s fascination with options trading. ETFs like JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI), JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ), and NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI) get you exposure to your favorite indexes and hand you a monthly paycheck. Two years ago, an ETF that handed you a yield in the high single digits or even double digits, let alone get you Nasdaq-100 or S&P 500 exposure, would’ve been a pipe dream.
Today, ETFs with these characteristics are available, and there are numerous options. Retirees and income investors are increasingly increasing their exposure to these ETFs due to the juicy yield plus the upside potential.
We’ll be looking into three such popular ETFs that rent the upside away through systematic call writing, then mail you fat checks. Together, they have pulled in billions in 2024 and so far in 2025.
JPMorgan Equity Premium Income ETF (JEPI)
JPMorgan Equity Premium Income ETF is an actively managed fund that generates monthly income with a two-part investment strategy. Its portfolio mainly consists of U.S. large-cap stocks from the S&P 500 Index.
JEPI uses an options overlay strategy by selling (writing) out-of-the-money call options on the S&P 500 Index. The fund doesn’t directly write these calls but instead purchases equity-linked notes (ELNs) that provide economic exposure to the profits from those call options.
In exchange for the options premium income, you’ll be forgoing most of the upside potential. At the same time, you remain mostly exposed to the downside risk. This strategy has worked wonders due to the market going up continuously in the past two years.
JEPI comes with an 8.35% dividend yield and a 0.35% expense ratio, or $35 per $10,000. The ETF itself is down 2% year-to-date, minus the dividends.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
JPMorgan Nasdaq Equity Premium Income ETF is another actively managed ETF. It provides exposure to Nasdaq-100 stocks, and the strategy is quite similar to JEPI.
The ETF has a portfolio of U.S. large-cap stocks, mostly from the Nasdaq-100 Index. It then uses an options overlay where the fund writes out-of-the-money call options on the Nasdaq-100 Index. These are typically one-month call options designed to generate income and provide investors with a portion of market upside while reducing volatility.
The fund packages these call options into equity-linked notes (ELNs), which allows all premiums earned to be distributed to investors as dividends rather than as capital gains or return of capital.
Again, you’re letting go of upside potential while taking on similar downside risk.
JEPQ gets you a higher dividend yield of 10.17%. It carries the same expense ratio as JEPI at 0.35%. JEPQ is actually up 3.25% year-to-date due to how strongly Nasdaq stocks have performed.
NEOS Nasdaq-100 High Income ETF (QQQI)
NEOS Nasdaq-100 High Income ETF is also actively-managed, and it targets stocks in the Nasdaq-100 Index. QQQI uses a covered call options strategy, where it sells (writes) call options on its Nasdaq-100 holdings.
QQQI is the most aggressive of the three and concentrates more on growth stocks. It focuses exclusively on the Nasdaq-100, and it is also the newest of the three ETFs.
QQQI comes with a 13.29% yield and a moderately high expense ratio of 0.68%, or $68 per $10,000. It is up 4.81% year-to-date due to aggressive growth stocks doing well.
For maximum income, I’d choose QQQI.
If you want lower volatility and better tax efficiency with broad market exposure, choose JEPI. Or, if you want Nasdaq exposure with income at a moderate yield level, choose JEPQ.
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