The Magnificent Seven stocks have become popular covered call candidates for a few reasons. First, they have highly liquid options chains with dozens of strike prices and expiration dates, making it easy to enter and exit positions. Second, they tend to be volatile, which means option premiums are often much richer than what you would find on lower-volatility stocks.
The drawback is capital requirements. Covered calls require ownership of 100 shares. When many Magnificent Seven stocks trade in the hundreds of dollars per share, it can quickly become difficult to maintain proper position sizing. Buying 100 shares of a single stock can represent a substantial percentage of a portfolio.
One alternative is the Roundhill Magnificent Seven ETF (MAGS). MAGS provides equal-weight exposure to all seven Magnificent Seven companies for a 0.30% expense ratio. The fund has attracted $3.5 billion in AUM and is one of Roundhill’s most successful launches.
The good news for income investors is that MAGS has a liquid options chain of its own. Here’s a simple covered call selling example using options data from Yahoo Finance as of June 18, 2026, followed by a closer look at an ETF that does the hard work on your behalf.
A Simple Covered Call Example Using MAGS
As of June 18, 2026, MAGS is trading around $65 per share. Since one options contract controls 100 shares, you’ll need approximately $6,500 in capital to sell one covered call. That is significantly less than attempting the same strategy on several individual Magnificent Seven stocks.
For this example, let’s look at the one-month July 17, 2026 expiration and the $67 strike call. This strike sits slightly out of the money (OTM), leaving some room for upside appreciation while still generating substantial premiums. A one-month expiration also gives time decay, also known as theta, an opportunity to work in your favor.
Currently, the contract shows a bid of $1.15 and an ask of $1.35. Taking the midpoint gives us a premium of $1.25 per share. $1.25 × 100 shares = $125 in premium income. Against a $6,500 position, that’s: $125 ÷ $6,500 = 1.92%. In other words, this single trade would generate 1.92% in yield on your $6,500 principal over roughly one month before commissions and taxes.
There are three possible outcomes at expiration:
- If MAGS finishes below $65, you keep the $125 premium but continue holding shares that have declined in value.
- If MAGS finishes between $65 and $67, you keep both the shares and the premium.
- If MAGS finishes above $67, your shares are called away. You keep the premium, but any gains beyond $67 belong to the option buyer.
If it were possible to consistently repeat a similar trade every month, the annualized yield would be: 1.92% × 12 = 23.04%. Of course, real-world results will vary. Option premiums depend heavily on implied volatility, time to expiration, interest rates, and market conditions. There is no guarantee future contracts will generate similar levels of income.
A More Hands-Off Alternative
If managing options positions sounds like more work than you’d like, there is an ETF that essentially does this for you. The Roundhill Magnificent Seven Covered Call ETF (MAGY) owns MAGS and actively sells covered calls against the portfolio on behalf of investors.
Roundhill publishes a high degree of transparency around the strategy. Investors can see how much of the portfolio is overwritten, the strike prices being used, the remaining upside available, and the days until expiration. The trade-off is cost. MAGY charges a 0.99% expense ratio, substantially higher than MAGS itself. In exchange, investors receive a very high income stream.
As of June 2026, MAGY carried a distribution rate of approximately 25.7%, calculated by annualizing the most recent weekly distribution and dividing it by net asset value. Just remember that this income comes from selling upside. A high yield may look attractive, but it is not a free lunch. The more income generated from covered calls, the more future appreciation is sacrificed.
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