Covered Call ETFs: TSLY, MSTY, QDTE

How Selling Calls Fund Weekly and Monthly Dividends

Investors seeking reliable, high-yield income streams are increasingly turning to exchange-traded funds (ETFs) that employ covered call strategies. These ETFs, such as YieldMax TSLA Option Income Strategy (TSLY), YieldMax MSTR Option Income Strategy (MSTY), and Roundhill Innovation-100 0DTE Covered Call Strategy (QDTE), generate distributions by selling call options on their underlying holdings. In this blog post, I explain how these strategies work, why they offer such attractive yields, and the factors that drive higher distributions …. essential knowledge for anyone interested in income-focused ETFs.

How Covered Call ETFs Work

A covered call ETF holds a portfolio of stocks or other assets and sells (or “writes”) call options against those holdings. The premium received from selling these options is passed on to investors as regular distributions, typically weekly or monthly. This strategy is especially popular in sideways or moderately bullish markets, where the underlying securities do not experience rapid price appreciation.

Key Mechanics

• Income Generation: The ETF collects option premiums, which are distributed to shareholders.