Finance
How to Know If A Covered Call ETF is Destructive (NAV Erosion)
Date: 2026-06-16 22:00:17
My Portfolio & Connect: https://www.patreon.com/dividendbull
Covered call ETFs offer one of the best opportunities for investors seeking high income. A double-digit dividend yield with upside in share price and distributions is something you won’t find in a lot of places, at least not very consistently. In the last couple of years, these investments have exploded in popularity, and there are now over 500 covered call ETFs due to the soaring demand for more high yielding options. And while the number of choices that now exist is great, it’s given us a problem. Many of these investments have been destructive to their own NAVs. Fund companies wanting to capitalize on the demand for high yielding opportunities are releasing funds that don’t always have great option strategies. The problem we’ve had when it comes to covered call funds is recognizing which of these ETFs are solid and which are destructive. So today I’m going to go over how you can tell which covered call funds are likely to destroy your capital versus maintain or appreciate your income.
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