Looking at your portfolio and feeling a distinct lack of income? Whether those just starting out or those close to retirement, investors of all types can benefit from a little more income coming from their investments. Finding the right ETF or fund to do so is the real task, and the stars may be aligning to encourage adding equity income right now with covered call ETFs powered by a daily option strategy.
See more: Tax-Loss Harvesting? Get More From Current Income in Daily Covered Call ETFs
Why now? There are a few specific reasons to consider daily covered call ETFs to close out 2025.
Declining Short-Term Interest Rates From Fed Rate Cuts
Falling interest rates have some important implications for portfolios. While they can provide some helpful stimulus to the macro economy, for investors, falling rates can also throw a wrench in their fixed income plans. Declining short-term interest rates can alter how investors’ debt securities perform, requiring other sources of income to step in.
Investors Can Tax-Loss-Harvest Into Income ETFs
The end of the year sees many investors and advisors engage in a healthy amount of tax loss harvesting. That doesn’t just present an opportunity to reduce the end of the year cap gains tax, but it also offers a case to swap from one ETF to another for a given allocation.
For example, investors may have positions in increasingly popular covered call ETFs. Many of the largest funds use a monthly options strategy, and have underperformed during the current market rally. Some strategies may also distribute more income than they produce in total returns, potentially creating a tax loss harvesting opportunity. Should any of those funds be producing a loss for portfolios, investors can take the loss by selling that fund and reinvest in covered call ETFs that use daily options, for example. These strategies typically capture more of the upside when markets rally.
Next-Generation Covered Call ETFs
Now may be the time to add income with the arrival of some particularly potent income ETFs. Covered call ETFs have become quite popular for investors, with their stated goal of delivering high income levels with equity market participation.
This year, however, has seen some covered call ETFs struggle, particularly those that use a monthly options strategy. Markets have offered some significant rallies, but many covered call ETFs have missed out. In exchange for earning high levels of income, monthly covered call strategies typically sacrifice a significant amount of market upside.
Covered call ETFs that use daily options can improve this tradeoff and provide that high income while also offering more of the market’s upside than those monthly covered call ETFs.
A strategy like the ProShares S&P 500 High Income ETF (ISPY ) can appeal. The current ETF charges a 55 basis point (bps) fee. The fund has returned 11.3% YTD per ETF Database data and For those looking to add income to their portfolios without sacrificing upside, a fund like ISPY could appeal.
For more news, information, and analysis, visit the Market Insights Content Hub.
