JEPQ 11% Yield - Are 10%+ Yield Covered Call ETFs a Scam? Part 2
This week, I’m exploring the JEPQ ETF, a distinctly different fund from XYLD, which I analyzed last week.
I. The Theoretical Features of Covered Call ETFs: More Income, Less Volatility, Less Capital Growth
A. Covered Call for Dummies
A covered call fund like JEPQ buys stocks (e.g., those in the Nasdaq 100) and sells call options on them to earn a payment called a premium. Selling a call means signing a contract that gives the buyer the right to purchase those stocks at a set price (the strike price) before a specific date (the expiration). The fund collects the premium immediately, and this cash is included in the income distributed to investors as regular distributions. If the stock stays below the strike price at expiration, the fund keeps both the stocks and the premium; if the stock exceeds the strike price, the fund must sell the stocks to the buyer at the agreed price. JEPQ sells call options on stocks within the Nasdaq 100 index.
B. Theoretical Advantages
High Income Generation: Covered call funds deliver attractive yields. JEPQ boasts an annual yield of 11% as of May 11, 2025.
Lower Volatility: The premiums… f
Access the Full Performance Data and Investment Takeaway
The complete performance analysis, charts, and my final investment decision are now hosted on our dedicated platform.
You have the theoretical framework and the method, but to confirm if this 11% yield is a viable income stream, you need the hard evidence:
The Results: Full performance data and charts showing how JEPQ’s total return stacks up against the Nasdaq 100 since its inception.
The Risk Factor: Analysis showing why JEPQ’s maximum drawdowns are surprisingly similar to the Nasdaq 100’s.
My Investment Take: Why I (a European income investor) purchased an initial position during the tariff dip, and why this ETF fits my income needs.
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