Back in February, I went over the best ETFs for selling zero day to expiry (0DTE) covered calls. At the time, there were really only three worth mentioning: the SPDR S&P 500 ETF Trust (SPY), the Invesco QQQ Trust (QQQ), and the iShares Russell 2000 ETF (IWM).
The catch with those funds is cost. All three trade at high share prices, so to buy 100 shares — the minimum needed to write covered calls — you’re looking at tens of thousands in capital. That’s a steep entry point if you’re just starting out and don’t want to tie up five figures in a single trade.
Fortunately, there are ETFs priced under $100 a share that still check the right boxes. They trade with plenty of volatility (which boosts premiums, all else being equal) and offer weekly contracts. I’ve also screened them for healthy open interest and tight spreads, so you’re not wasting money on execution.
You can sell calls however you want, but for beginners I prefer keeping it simple: sell the Friday weeklies at-the-money (ATM). It’s aggressive and caps all your upside, but maximizes income. If you get assigned, just buy the shares back back after the weekend or rotate into another ETF.
IBIT has been one of the most successful ETF launches ever, amassing over $84 billion in AUM since debuting in January 2024. As expected, it’s volatile given the underlying is spot bitcoin, but that same volatility creates rich opportunities for options sellers.
As of Monday, September 29, 100 shares of IBIT would cost you about $62.09 each, or $6,209 in total. Selling the Friday, October 3, $62.50 strike call — slightly out of the money (OTM) — nets a $2.75 premium per share, or $275 per contract. That’s a 4.43% yield for just one week. Annualized across 50 full trading weeks, that’s roughly a 221% yield, before commissions and taxes.
Of course, such sky-high implied yields reflect bitcoin’s volatility. Assignment is likely, and consistency over time will depend heavily on how IBIT trades week to week. But with Bitcoin staying above the $100,000 mark, it’s not a bad way to harvest some volatility, if you don’t mind potentially bag holding.
If you’d rather focus on equities instead of crypto, skip IBIT and take a look at MAGS. This ETF holds Microsoft, Amazon, Tesla, Nvidia, Alphabet, Meta Platforms, and Apple in equal weights, rebalanced quarterly. Exposure is achieved through swaps, and the expense ratio is 0.29%.
As of September 29, MAGS trades at $64.78 per share. Buying 100 shares would cost $6,478. You could sell the slightly OTM Friday, October 3, $65 strike call for a $0.36 premium per share, or $36 per contract. That works out to a 0.56% yield in a single week, which annualizes to about 27.8% over 50 trading weeks, before taxes and commissions.
Of course, the ETF is highly concentrated. It only holds seven mega-cap tech, consumer discretionary, and communications names, so the risks are tied to that group. But since most of these stocks trade at high per-share prices, writing calls on them individually requires substantial capital. MAGS provides a more efficient, lower-cost way to implement the same strategy in a single ticker.
If you’re concerned about lofty valuations for U.S. tech stocks, KWEB might be worth a look. This ETF tracks the CSI Overseas China Internet Index, giving exposure to Hong Kong-listed H-shares and U.S.-listed ADRs of Chinese internet companies. The heavyweights do most of the work, with Alibaba, Tencent, and PDD accounting for a large share of the portfolio.
KWEB is volatile. The ETF carries a five-year monthly beta of 1.89, meaning its swings are almost twice that of the broader market. That volatility translates into fat options premiums. As of Sept. 29, with KWEB at $41.95 per share, you could buy 100 shares for about $4,195 and sell the Friday Oct. 3 $42 call for $0.55 per contract. That nets $55 in premium, or a 1.31% weekly yield. Annualized over 50 trading weeks, that works out to roughly 65.6% before taxes and commissions.
Of course, there’s plenty of risk here. Just like with bitcoin, the high yield reflects extreme uncertainty. Prices could just as easily lurch to the downside if China’s economy or regulatory environment worsens. On the flip side, if Chinese internet stocks rip higher, you’ll miss out on the upside since your shares are called away. That trade-off is exactly what the premium is compensating you for, but whether the reward is fair depends entirely on market conditions.
