For some investors, traditional dividend stocks are just not scratching the income itch. That has created new interest in certain high-yield exchange-traded funds.
These funds boast high yields, driven by covered call strategies targeting indexes or even individual stocks.
Here are two such funds worth a closer look now.
The YieldMax TSLA Option Income Strategy ETF (TSLY) has been trading since November 2022. The fund pays out monthly with a forward yield of 62.37%, or $4.83 per share.
TSLY is down 43% on a year-to-date basis and is down 54% over the past 52 weeks.
The fund carries an expense ratio of 0.99%, or $99 on an initial $10,000 investment, and oversees assets totaling about $1.09 billion.
TSLY’s strategy is built around a synthetic covered call approach. Instead of holding Tesla (TSLA) stock directly, the fund creates synthetic long exposure by buying call options and selling put options, generally with terms of six months to a year and strike prices near Tesla’s market price.
To generate income, TSLY sells short-term call options — typically expiring within a month — at strike prices 0% to 15% above Tesla’s current price. This approach allows for participation in Tesla’s price movements but caps upside to roughly 15% of monthly gains, while leaving the fund fully exposed to downside risk if Tesla shares fall.
The portfolio is structured to support this options-based strategy, with allocations including bonds, cash, stocks, and short stock positions. Its top holdings feature a mix of Tesla options contracts and U.S. Treasury notes with varying maturities, making TSLY’s composition quite different from traditional equity ETFs.
The Roundhill S&P 500 Target 20 Managed Distribution ETF (XPAY) is part of the Roundhill Investments family and began trading on Oct. 31, 2024. XPAY’s defining feature is its monthly distribution, with the latest payout of $0.953 per share on June 11, 2025, and a forward payout of $11.43. This translates to forward yield just over 21%.
As of July 2, 2025, XPAY has posted a year-to-date decline of 4%. The total assets under management are approximately $5.1 million.
XPAY is actively managed and tracks the performance of the S&P 500 Index ($SPX), but it does so with a unique twist. Instead of holding the index directly, the fund invests at least 80% of its net assets in deeply in-the-money FLEX Options on the SPDR S&P 500 ETF Trust (SPY), providing synthetic exposure to the S&P 500’s returns. This approach allows XPAY to maintain equity market participation while managing cash flows to support its ambitious monthly distribution target.
