What is the difference between 1st, 2nd, 3rd and 4th generation covered call ETFs?

1st generation (QYLD, XYLD, etc.) sells 100% at-the-money (ATM) calls on the whole index, paying high distributions but giving up almost all upside. 2nd generation (JEPI, JEPQ, DIVO) uses active stock selection and partial coverage to keep some upside open. 3rd generation (GPIX, GPIQ) uses out-of-the-money (OTM) calls and a target distribution rate to capture more index upside. 4th generation (QDTE, XDTE, etc.) sells daily zero-days-to-expiry (0DTE) options and distributes weekly, chasing upside participation and high income at once. YieldMax uses synthetic covered calls on single stocks like Tesla and Nvidia, with very high distribution rates but large swings in principal.

How is the reinvestment of distributions into the underlying calculated?

On each ex-distribution date, the distribution is calculated as shares held x distribution per share. After applying your tax rate, the after-tax amount buys the selected underlying (e.g. QQQ, QLD or TQQQ for Nasdaq covered calls; Bitcoin or IBIT for Bitcoin covered calls) at that day's closing price. Any dividends paid by the underlying you bought are reinvested the same way.

How much tax is withheld on covered call ETF distributions?

It depends entirely on your country of residence and the fund's domicile. Withholding on U.S.-listed ETF distributions, local dividend income tax and any tax treaty all differ by jurisdiction, so this tool leaves the tax field blank by default. Enter the rate that applies to you (for example, U.S. non-residents are often subject to a treaty withholding rate), or leave it blank to see pre-tax figures.

Can I trust these backtest results as they are?

The tool uses real closing-price and distribution data from Yahoo Finance, but it does not account for trading commissions, FX costs or slippage, and past performance does not guarantee future returns. In particular, 4th generation and YieldMax ETFs have short listing histories, so their figures have limited statistical meaning. Use the results as reference only.

Covered Call ETF Calculator

Q: Do covered call ETFs earn less than the underlying?

Generally, in strong bull markets the call selling caps the upside, so even reinvesting distributions struggles to keep up with the underlying's total return; in sideways or mildly falling markets the option premium can make them better than the underlying. Which one wins depends on the period, so use the backtest on this page to check actual period-by-period results yourself.

Q: Can I backtest a single ETF such as QQQI, QDTE or SPYI?

Yes. Pick it from the Covered Call ETF dropdown on the Backtest tab, or type the ticker into the direct ticker entry box just below it. Clicking a ticker in the '31 covered call and dividend ETFs you can backtest' list further down the page loads it too. Supported: QYLD, XYLD, RYLD (1st gen), JEPI, JEPQ, DIVO (2nd gen), GPIX, GPIQ (3rd gen), QDTE, XDTE, RDTE, QDTY, QQQI, SPYI (4th gen), TSLY, NVDY, MSTY, CONY, AMZY, APLY, YMAX (YieldMax), YBTC (bitcoin covered call) and SCHD, DGRO, VIG, NOBL, VYM, HDV, SPYD, SPHD, VNQ (dividend ETFs). You can also open one directly, e.g. bustudy.kr/en/etf#qqqi.

Q: Which is better: living off covered call distributions, or withdrawing 4% a year from QQQ?

In the Compare ETFs tab, picking a covered call fund (JEPQ etc.) alongside a stock or ETF (QQQ etc.) splits the distribution handling into two boxes. Set (1) Covered call & dividend ETFs to 'Spend distributions as living expenses' and (2) Stocks & ETFs to 'Withdraw N% a year' with the rate at 4, and you get exactly that comparison. Rule (2) sets each year's budget to that day's portfolio value times the rate, takes 1/12 of it each month, spends after-tax dividends first and sells only the shortfall. So the covered call fund never sells a share and lives on distributions alone, while QQQ sells 4% a year. The ranking table breaks out what was withdrawn and what is left, and tags each row with the rule it got, so you can see whether the bigger spender also kept its principal. If a portfolio runs dry, the depletion date is shown and withdrawals stop.

Q: QQQ listed in 1999 - why does the comparison start in 1985?

With long-term simulation enabled, pre-inception QQQ/SPY/IWM use corresponding index and dividend proxies; actual ETF prices and cash distributions replace the proxy after inception. Leveraged funds apply daily index total returns times leverage, minus expenses and funding costs. Covered-call funds use official strategy indices or a separate strategy model without an arbitrary annual return deduction. Available start dates depend on common input coverage. Pre-inception results are counterfactual estimates.

Classify covered call ETFs from 1st to 4th generation and YieldMax at a glance, then backtest on real data what would have happened if you had used the distributions to buy the underlying.

Covered call generations

Even when they are all called "covered call," the character changes completely with how the options are sold. With each generation they have evolved toward higher upside participation.

Gen 1 100% ATM covered call

Sells 100% at-the-money (ATM) calls on the whole index. Distributions are high, but almost all bull-market gains are given up. Over long holding periods, principal (NAV) tends to slowly erode.

QYLD · XYLD · RYLD

Gen 2 Active · partial coverage

Actively picks holdings and covers only part of them with ELNs/options. A middle-ground design that keeps some upside open while paying a monthly distribution.

JEPI · JEPQ · DIVO

Gen 3 OTM · target distribution

Sells out-of-the-money (OTM) calls or dynamically adjusts the coverage ratio to greatly raise index-upside participation. Manages the distribution rate toward a target (around 8-10%).

GPIX · GPIQ

Gen 4 0DTE daily options

The newest approach, using zero-days-to-expiry (0DTE) options or tax-efficient index options to chase upside participation and high distributions at once. QDTE, XDTE, RDTE and QDTY pay weekly.

QDTE · XDTE · RDTE · QDTY · QQQI · SPYI

YieldMax single-stock synthetic covered call

Runs covered calls by synthesizing single stocks such as Tesla and Nvidia with options. Distribution rates reach tens of percent per year, but the risk of principal swings and NAV erosion is the highest.

TSLY · NVDY · MSTY · CONY · AMZY · APLY · YMAX

₿ BTC Bitcoin covered call

Sells call options on a Bitcoin ETF to convert volatility into cash. In exchange for giving up Bitcoin's big rallies, it pays a weekly distribution.

YBTC

⚠️ The essence of covered calls: distributions are not free — they are future upside converted into cash upfront. Especially for Gen 1 and YieldMax, if you do not reinvest the distributions, principal can shrink over time. The gap between "price return" and "total return (distributions reinvested)" in the dashboard below is the evidence.

Dashboard — how much it rose, how much it pays

Based on real Yahoo Finance data. Yield (TTM) is the sum of the last 12 months of distributions ÷ current price; total return assumes all distributions were reinvested (pre-tax) into the same ETF.

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※ Since-inception returns are measured from the data start date (usually the listing date). Gen 4 and YieldMax have short histories, so their figures have limited statistical meaning.

Covered Call ETF · Choose settings

You can combine a lump sum with monthly contributions. After-tax distributions automatically buy the selected target at the closing price on the ex-distribution date.

ETF prices, distributions and underlying movements after inception are used to calibrate the simulation automatically. Pre-inception history is estimated; actual data is used after inception.

Covered Call ETF

Initial lump-sum investment ($)

Monthly contribution ($) — first trading day of each month

Start date

End date

Reinvest distributions into (after-tax)

2× and 3× investments target the index's daily return.

Distribution tax rate (%) — leave blank if unsure (varies by country)

Stock or ETF to compare — what if the same money went here instead?

Select ETFs to compare (0/10)

Everything is compared on an after-tax basis. You can give covered call / dividend ETFs and stocks & ETFs (QQQ, SPY…) different rules, so you can ask things like "living off covered call distributions vs. withdrawing 4% a year from QQQ." You can also cut the test to a specific window with a start and end date.

ETF prices, distributions and underlying movements after inception are used to calibrate the simulation automatically. Pre-inception history is estimated; actual data is used after inception.

Start date (on or after the date all selected assets exist)

End date (to test a specific window)

Investment ($, lump-sum)

Distribution tax rate (%)

① Covered call & dividend ETFs (JEPQ, QYLD, SCHD…)

31 covered call and dividend ETFs you can backtest

Click a ticker to load it into the backtest form. Any of them can be run on real price and distribution data with lump-sum or monthly buying, distributions reinvested, held as cash or spent as living expenses, and an N% annual withdrawal.

1st generation · 100% at-the-money calls on the index

QYLD · Global X Nasdaq 100 Covered Call — sells at-the-money calls on 100% of the Nasdaq 100, monthly distributions. High yield, but it gives up almost all of a bull market. QYLD backtest
XYLD · Global X S&P 500 Covered Call — the same approach on the S&P 500, monthly. XYLD backtest
RYLD · Global X Russell 2000 Covered Call — small-cap version, monthly. RYLD backtest

2nd generation · active stock selection + partial coverage

JEPI · JPMorgan Equity Premium Income — low-volatility S&P 500 names plus ELN premium, monthly. JEPI backtest
JEPQ · JPMorgan Nasdaq Equity Premium Income — the Nasdaq 100 version of JEPI, with more upside left open than 1st generation. JEPQ backtest
DIVO · Amplify CWP Enhanced Dividend Income — dividend blue chips with calls written on only some positions, monthly. DIVO backtest

3rd generation · out-of-the-money calls + target distribution

GPIX · Goldman Sachs S&P 500 Premium Income — OTM calls and a target payout to keep more index upside, monthly. GPIX backtest
GPIQ · Goldman Sachs Nasdaq 100 Premium Income — the Nasdaq 100 version of GPIX. GPIQ backtest

4th generation · 0DTE daily options · high income

QDTE · Roundhill Innovation-100 0DTE — sells same-day-expiry options daily and distributes weekly. QDTE backtest
XDTE · Roundhill S&P 500 0DTE — the S&P 500 version, weekly. XDTE backtest
RDTE · Roundhill Small Cap 0DTE — the Russell 2000 version, weekly. RDTE backtest
QDTY · YieldMax Nasdaq 100 0DTE — YieldMax's Nasdaq 100 0DTE fund, weekly. QDTY backtest
QQQI · NEOS Nasdaq 100 High Income — active option overlay on the Nasdaq 100 with Section 1256 tax treatment, monthly. QQQI backtest
SPYI · NEOS S&P 500 High Income — the S&P 500 version of QQQI, monthly. SPYI backtest

YieldMax · synthetic covered calls on single stocks

TSLY · YieldMax TSLA Option Income — synthetic covered calls on Tesla. Very high yield, very large NAV swings. TSLY backtest
NVDY · YieldMax NVDA Option Income — the Nvidia version, monthly. NVDY backtest
MSTY · YieldMax MSTR Option Income — on Strategy (MSTR), so effectively a leveraged bitcoin proxy. MSTY backtest
CONY · YieldMax COIN Option Income — the Coinbase version, monthly. CONY backtest
AMZY · YieldMax AMZN Option Income — the Amazon version. AMZY backtest
APLY · YieldMax AAPL Option Income — the Apple version. APLY backtest
YMAX · YieldMax Universe Fund of Funds — spreads across the whole YieldMax lineup, weekly. YMAX backtest

Bitcoin covered call

YBTC · Roundhill Bitcoin Covered Call — bitcoin exposure with calls written against it, weekly. YBTC backtest

Dividend ETFs (not covered call · comparison baselines)

SCHD · Schwab US Dividend Equity — tracks the Dow Jones US Dividend 100, quarterly. The usual yardstick against covered calls. SCHD backtest
DGRO · iShares Core Dividend Growth — US companies with a record of raising dividends, quarterly. DGRO backtest
VIG · Vanguard Dividend Appreciation — 10+ years of dividend increases. Low yield, strong price growth. VIG backtest
NOBL · ProShares S&P 500 Dividend Aristocrats — only companies with 25+ years of increases, quarterly. NOBL backtest
VYM · Vanguard High Dividend Yield — broad, low-cost US high-dividend exposure, quarterly. VYM backtest
HDV · iShares Core High Dividend — high yielders screened for financial health, quarterly. HDV backtest
SPYD · SPDR Portfolio S&P 500 High Dividend — the 80 highest yielders in the S&P 500, quarterly. SPYD backtest
SPHD · Invesco S&P 500 High Dividend Low Volatility — high yield paired with low volatility, monthly. SPHD backtest
VNQ · Vanguard Real Estate — US real estate REITs, quarterly. VNQ backtest

※ As comparison underlyings you can also use QQQ, QLD, TQQQ, SPY, SSO, UPRO, IWM, UWM, URTY, DIA, bitcoin (BTC), IBIT, TSLA, NVDA, AAPL, AMZN, MSTR and COIN. For anything not listed, type the ticker into the direct ticker entry box above.

Frequently Asked Questions

Do covered call ETFs ultimately lose to the underlying?

It depends on the period. In strong bull markets, call selling caps the upside, so even reinvesting distributions struggles to keep up with the underlying's total return. In sideways or mildly falling markets, the option premium acts as a cushion and can beat the underlying. The most accurate way is to try different periods yourself in the backtest tab on this page.

Why is the tax field blank by default?

Because tax on distributions depends entirely on where you live and the fund's domicile. Withholding on U.S.-listed ETFs, local dividend income tax and tax treaties all differ by country, so this tool leaves the field blank. Enter the rate that applies to you (many U.S. non-residents face a treaty withholding rate), or leave it blank to see pre-tax figures.

How is "buying the reinvestment target with distributions" actually calculated?

On each ex-distribution date, the distribution equals shares held at that time × distribution per share. After tax, that amount buys the selected asset at that day's close (or the prior trading day if the market is closed). If the asset you accumulate pays dividends (e.g. QQQ), those dividends are reinvested the same way.

Can I backtest a single ETF such as QQQI, QDTE or SPYI?

Yes. Pick it from the Covered Call ETF dropdown on the "Backtest & underlying reinvestment" tab, or type the ticker into the direct ticker entry box just below it. Clicking a ticker in the 31 covered call and dividend ETFs list further down loads it as well. Supported: QYLD, XYLD, RYLD (1st gen), JEPI, JEPQ, DIVO (2nd gen), GPIX, GPIQ (3rd gen), QDTE, XDTE, RDTE, QDTY, QQQI, SPYI (4th gen), TSLY, NVDY, MSTY, CONY, AMZY, APLY, YMAX (YieldMax), YBTC, and SCHD, DGRO, VIG, NOBL, VYM, HDV, SPYD, SPHD, VNQ (dividend ETFs). You can also open one directly with bustudy.kr/en/etf#qqqi.

Which is better: living off covered call distributions, or withdrawing 4% a year from QQQ?

In the "Compare ETFs" tab, pick a covered call fund (JEPQ etc.) alongside a stock/ETF (QQQ etc.) and two handling boxes appear. Set ① Covered call & dividend ETFs to "Spend distributions as living expenses" and ② Stocks & ETFs to "Withdraw N% a year" with the rate at 4, and you get exactly that comparison. Rule ② spends after-tax dividends first and sells only the shortfall, so the covered call fund never sells a share and lives on distributions alone, while QQQ sells 4% a year to fund the same life. The ranking table breaks out what was withdrawn and what is left, and tags each row with the rule it got, so you can see immediately whether the bigger spender also kept its principal.

How is the withdrawal rate calculated, and what if the portfolio runs out?

On the first trading day of each year the annual budget is set to that day's portfolio value × the withdrawal rate, and 1/12 of it is taken on the first trading day of each month. It is a fixed percentage, not a fixed dollar amount, so the withdrawal shrinks as the portfolio shrinks. If the portfolio still runs dry, the ranking table shows 💀 with the depletion date and withdrawals stop from there. The annualized figure feeds every withdrawal into the cash flows and is computed as XIRR.

QQQ listed in 1999 — why does the comparison start in 1985?

Before inception, QQQ, SPY and IWM use their corresponding index plus dividend estimates. After inception, the actual ETF price and distribution series are used. Leveraged proxies apply daily leverage, dividend returns, fees and lagged short-term financing rates before splicing actual ETF data. The common start depends on available inputs; pre-inception results are counterfactual estimates.

Why are YieldMax ETF distributions so unusually high?

Because single stocks like Tesla and Nvidia are far more volatile than an index, so their option premiums are large. However, much of the distribution can be return of capital (ROC), and when the underlying surges the fund fails to keep up while still taking most of the drops — so principal (NAV) can erode quickly. Judging by the distribution rate alone is dangerous.

⚠️ For reference only. Every figure in this calculator is an estimate based on historical data, and past performance does not guarantee future returns whatsoever. Commissions, FX costs, taxes and slippage may differ from reality, so do not treat the results as gospel and do not make investment decisions by trusting them as-is. All investment judgments and their consequences rest entirely with you, the investor.

📐 Leveraged proxies: only pre-inception history is modeled, with index dividends, a 0.95% fee assumption and lagged IRX financing (2% fallback). Actual ETF prices and distributions are used after inception. Tracking differences can be material.