Markets
Options Income
Selling options pays you cash up front for accepting an obligation: to deliver shares at a set price, or to buy them at one. This section explains how each of those trades is built, what it actually pays, what it costs when it goes wrong, and where the same strategy can be bought pre-packaged as a fund.
Data as of Aug 25, 2026.
The tiles above hold two different kinds of number. Any distribution-rate figure is computed from our own fund rows on a forward basis — the last regular distribution annualised over the current price — and it is a distribution, not interest. The contrast tile is a published rate series read from FRED: where it is the 3-month Treasury bill it is quoted on a discount basis, and where it is the FDIC national money-market average it is a survey of deposit rates. Different bases, different providers, and not a like-for-like comparison.
What a premium actually is
The one idea the rest of this section rests on.
When you sell an option you are selling a right. A call gives its buyer the right to buy 100 shares from you at a fixed strike price; a put gives its buyer the right to sell you 100 shares at one. The buyer pays for that right immediately, and the payment — the premium — is yours from the moment the trade is made.
What you gave up arrives later. A call you wrote caps your upside: above the strike, the gain belongs to the buyer and you deliver the shares anyway. A put you wrote obliges you to buy: below the strike, you pay the strike price no matter how far the shares have fallen. The premium is the price of that obligation, and it is collected once while the obligation lasts for the whole life of the contract.
Plain version: you are paid today for promising something about tomorrow. The payment is certain and small. The promise is uncertain and can be large.
Interest is rent on money you have lent. The borrower owes it on a schedule, the amount is fixed in the contract, and the worst realistic case is that the borrower defaults. That is what the savings rate, the T-bill rate and the coupon on a bond all measure.
A premium is the price of a right you have sold. The buyer pays once, up front, and in exchange you accept an obligation that lasts until the option expires: to deliver shares at the strike if you wrote a call, or to buy shares at the strike if you wrote a put. There is no schedule, no principal to be repaid, and no issuer who owes you anything.
That is why a covered-call programme and a certificate of deposit cannot be compared on their headline percentages. One number is contractual interest on returnable principal; the other is a payment for giving away the good outcomes while keeping the bad ones. They are different kinds of number that happen to share a percent sign.
The strategies, side by side
Seven ways the same two trades get assembled. A comparison, not a ranking — nothing here is ordered by preference.
Each row is one strategy, and the columns answer the same five questions about it: what actually pays you, what capital has to be there before the trade can be placed, how far the gain can run, what the worst case looks like, and how much attention the position needs. Nothing in the table is a price, a premium or a yield — there is no options-chain feed behind this site — and the order is editorial, not a ranking. The caveat: the “worst case” column is the one to read first, because on several of these the best case is fixed at the premium while the worst case is not fixed at all.
Read this table right to left. The worst-case column is the one that separates these seven from each other, because on most of them the amount you can make is fixed at the premium the moment the trade is placed while the amount you can lose is decided later by the market. The capital column is the other half of that: it is what has to be sitting in the account before the trade can be made at all, and it is the reason a strategy that sounds small can tie up a large balance. Nothing in the table is a price, and the order of the rows is editorial rather than a ranking.
| Strategy | What pays you | Capital required | Upside | Worst caseRead this column first. On several of these the best case is capped at the premium and the worst case is not capped at all. | Effort |
|---|---|---|---|---|---|
| Covered calls | Call premium | 100 shares per contract | Capped at the strike | Shares fall to zero, less the premium | Semi-passive |
| Cash-secured puts | Put premium + interest on the collateral | Strike x 100 in cash per contract | The premium only | Assigned, then shares fall to zero | Semi-passive |
| Put-write strategies | Index put premium + bill interest | Full index notional in cash or bills | The premium only | Index falls hard; the loss settles in cash | Semi-passive |
| Collar strategies | Net premium (call sold minus put bought) | 100 shares per contract + any net debit | Capped at the call strike | Limited by the put strike, less what it cost | Semi-passive |
| Credit spreads | Net credit between two option legs | Margin equal to the strike width less the credit | The credit only | Full strike width less the credit | Semi-passive |
| Iron condors | Two credits, one on each side | Margin on the wider side less the credit | The combined credit only | Wider spread width less the credit | Semi-passive |
| Covered-call funds | Fund distribution (premium, dividends, gains, capital) | The price of one share | Capped by the calls written inside the fund | The whole investment; leverage magnifies it | Truly passive |
A worked illustration
Round hypothetical numbers, arithmetic done on this page. There is no options-chain feed behind this site, so none of these figures is a market quote.
The two boxes below are arithmetic, not a market. Every figure in them comes from the round numbers in the input fields, which were chosen because they divide neatly — change any of them and the sentences underneath rewrite themselves. What they are for is the shape of the outcome rather than the size of it: how the premium is credited immediately, where the breakeven sits, and what happens on the day the obligation is called in. No premium here is a premium available anywhere.
Selling one covered call
Illustration, not a quote- Shares committed100
- Cost of the shares$5,000.00
- Premium received$200.00
- Premium / cost4.00%
- Breakeven share price$48.00
- Total if called away$5,700.00
Buy 100 shares at $50.00 and you have spent $5,000.00. Sell one call at a $2.00 premium and $200.00 is credited to the account — 4.00% of what the shares cost. Your upside is now capped at the $55.00 strike: if the shares are called away you receive $5,700.00 in total, a gain of $700.00. If the stock had instead run to $70.00 those shares would have been worth $7,000.00 — the $1,300.00 above the strike went to the option buyer, not to you. And if the stock fell to zero you would lose $5,000.00 less the $200.00 premium.
Hypothetical arithmetic on round numbers, before commissions, fees, bid-ask spreads, dividends and tax. Not a quote, not a forecast, and not an indication of any premium available in the market.
Selling one cash-secured put
Illustration, not a quote- Cash set aside$5,000.00
- Premium received$150.00
- Premium / collateral3.00%
- Breakeven share price$48.50
- Shares if assigned100
- Net if assigned at that price-$850.00
Set aside $5,000.00 and sell one put at the $50.00 strike for a $1.50 premium: $150.00 is credited, 3.00% of the cash you committed. That is the most this trade can ever make. If the shares fall to $40.00 you are still obliged to buy 100 of them at $50.00 — paying $5,000.00 for stock then worth $4,000.00, which after the premium leaves you down $850.00. The premium covers the first $1.50 per share of the fall and nothing beyond it.
Hypothetical arithmetic on round numbers, before commissions, fees, bid-ask spreads and tax, and ignoring any interest the collateral may earn. Not a quote and not a forecast.
Covered-call funds
The same strategy sold as a share: the fund writes the calls, manages assignment and pays the premium out as a distribution. Live figures from our database — a research screen, not a recommendation.
One row per exchange-traded fund in our universe that writes calls against its holdings, ordered by distribution rate, highest first — a research ordering, not a ranking. Price is from the daily quote pipeline; the distribution rate and annual rate are forward figures, the last regular distribution multiplied by the payments a year and divided by today's price, rather than the cash the fund actually paid over the past twelve months; the income score is our own screen. The caveat this whole section rests on: that percentage is a distribution rate, not interest and not a yield to maturity — part of it can be return of your own capital, and the fund's Section 19(a) notices are where the split is disclosed.
Each row is a fund that runs this strategy for you and pays the proceeds out as a distribution. Three things about the percentage. It is a distribution rate, not interest and not a yield to maturity: nothing is contractually owed. It is forward — the last payment multiplied out over a year — so it assumes a premium the fund has not earned yet. And part of it can be your own capital coming back, which raises the number without adding anything, so a high rate here is a question to take to the fund's own documents rather than an answer.
| Ticker | Fund | Price | Distribution rate (forward)The fund's latest distribution, annualised, over today's price. It is what has been paid out, which is not the same as what has been earned. | Annual rate (forward) | Pays | Income score |
|---|---|---|---|---|---|---|
| FEPI | REX FANG & Innovation Equity Premium Income ETF | $41.62 | 25.61% | $10.66 | Weekly | 28.30 |
| QQQI | NEOS Nasdaq-100 High Income ETF | $54.12 | 14.46% | $7.82 | Monthly | 30.90 |
| JEPQ | JPMorgan Nasdaq Equity Premium Income ETF | $59.75 | 14.16% | $8.46 | Monthly | 34.30 |
| RYLD | Global X - Russell 2000 Covered Call ETF | $16.26 | 12.20% | $1.98 | Monthly | 40.30 |
| SPYI | Neos S&P 500(R) High Income ETF | $53.53 | 12.15% | $6.50 | Monthly | 37.30 |
| QYLD | Global X - Nasdaq 100 Covered Call ETF | $18.13 | 12.11% | $2.19 | Monthly | 42.30 |
| GPIQ | Goldman Sachs Nasdaq-100 Premium Income ETF | $56.50 | 10.33% | $5.83 | Monthly | 44.60 |
| PBP | Invesco S&P 500 BuyWrite ETF | $23.20 | 9.69% | $2.25 | Monthly | 56.80 |
| XYLD | Global X - S&P 500 Covered Call ETF | $41.36 | 9.02% | $3.73 | Monthly | 51.70 |
| TLTW | iShares 20+ Year Treasury Bond BuyWrite Strategy ETF | $21.49 | 8.50% | $1.83 | Monthly | 47.70 |
| KNG | FT Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF | $51.77 | 8.39% | $4.34 | Monthly | 50.50 |
| GPIX | Goldman Sachs S&P 500 Premium Income ETF | $56.10 | 8.38% | $4.70 | Monthly | 50.20 |
| JEPI | JPMorgan Equity Premium Income ETF | $58.14 | 7.57% | $4.40 | Monthly | 53.00 |
| BALI | iShares U.S. Large Cap Premium Income Active ETF | $34.70 | 6.55% | $2.27 | Monthly | 55.40 |
| DIVO | Amplify CWP Enhanced Dividend Income ETF | $48.81 | 4.63% | $2.26 | Monthly | 51.40 |
Data as of Aug 25, 2026.
Option-income closed-end funds
Closed-end funds whose stated strategy includes writing options on part or all of the portfolio. Their share count is fixed, so price can sit above or below net asset value, and some of them use leverage.
A curated list of option-income closed-end funds, same columns and same basis as the table above: forward distribution rates built from the last regular distribution and its frequency, read from the same securities, quotes and computed tables the daily pipelines refresh, ordered highest rate first. The caveat that belongs to this wrapper alone: the share price can sit well above or below net asset value, so the rate is measured against what the market pays for the fund rather than against what the portfolio holds — and leverage, where a fund uses it, raises both the distribution and the damage.
Same columns, same basis, different wrapper. A closed-end fund issues its shares once, so the price on the screen is whatever buyers and sellers agree that day and can sit above or below what the fund's holdings are actually worth. The rate in this table is measured against that price, not against the holdings, and where a fund borrows to invest both the distribution and the fall are larger than the portfolio alone would produce.
| Ticker | Fund | Price | Distribution rate (forward)The fund's latest distribution, annualised, over today's price. It is what has been paid out, which is not the same as what has been earned. | Annual rate (forward) | Pays | Income score |
|---|---|---|---|---|---|---|
| EOS | Eaton Vance Enhanced Equity Income Fund II | $21.44 | 8.52% | $1.83 | Monthly | 57.90 |
| ETY | Eaton Vance Tax-Managed Diversified Equity Income Fund | $14.39 | 8.27% | $1.19 | Monthly | 57.40 |
| ETW | Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund | $9.85 | 8.09% | $0.80 | Monthly | 59.10 |
| ETV | Eaton Vance Tax-Managed Buy-Write Opportunities Fund | $15.10 | 7.89% | $1.19 | Monthly | 59.70 |
| BDJ | BlackRock Enhanced Equity Dividend Trust | $9.80 | 7.58% | $0.74 | Monthly | 61.90 |
| CII | BlackRock Enhanced Capital and Income Fund, Inc. | $24.35 | 6.95% | $1.69 | Monthly | 65.70 |
Coverage ratios, the instruments used and the distribution policy differ fund by fund and are set out in each fund's prospectus and Section 19(a) notices.
Read each strategy in full
One page each: how it is built, what pays, how assignment works, how it is taxed, and how it fails.
Covered calls
You already own at least 100 shares and sell someone the right to buy them from you at a fixed price; the premium is credited to your account immediately and the gain above that price is no longer yours.
Read →Cash-secured puts
You set the full purchase price aside in cash and sell someone the right to sell you 100 shares at a fixed strike; the premium is yours, and so is the obligation to buy if the stock falls.
Read →Put-write strategies
The cash-secured put run as a repeating programme, usually on a broad index rather than a single stock, with the collateral parked in Treasury bills.
Read →Collar strategies
Own the shares, sell a call above the market, and use the proceeds to buy a put below it — a band drawn around a position rather than an income stream.
Read →Credit spreads
Sell one option and buy a cheaper, further-out-of-the-money option of the same type and expiration; the net credit is the income and the gap between the strikes is the risk.
Read →Iron condors
Two credit spreads at once — a put spread below the market and a call spread above it — collecting both credits and paying out if the price leaves the range.
Read →Covered-call funds
An ETF or closed-end fund that holds a portfolio and writes calls against it, packaging the whole strategy into a share you can buy with no option approval and no assignment to manage.
Read →Open the covered-call calculator
Where these trades get placed
The education arm funded by the US options exchanges and OCC, with free courses and calculators covering covered calls, cash-secured puts, assignment and exercise.
Free; run by the exchanges and the clearing house rather than a broker
Visit The Options Industry Council ↗The clearing house that stands as counterparty to every listed US equity and index option and publishes the assignment, exercise and adjustment rules.
Publishes 'Characteristics and Risks of Standardized Options', the disclosure document brokers must supply
Visit Options Clearing Corporation ↗Operates options exchanges where much US index and equity option volume trades, and publishes the methodology for its buy-write and put-write benchmark indices.
Index methodology and historical index values are published free
Visit Cboe Global Markets ↗A US brokerage built around options order entry, with per-contract pricing and position-level risk and probability displays.
Visit tastytrade ↗Brokers differ in option approval levels, assignment notification, exercise fees and what they pay on collateral cash. Verify with the broker directly.