The exchange-traded fund (ETF) universe has exploded in both size and variety. According to ETF Central, a research, portfolio-building, and screening platform, nearly 5,800 ETFs were available to U.S. investors as of October 16, 2026. Of those, 1,009, or approximately 17%, were classified as "options strategies."

ETFs can use options for several purposes, including hedging, speculation and, increasingly, income generation. Unsurprisingly, a substantial portion of the options-strategy ETF universe consists of covered-call funds. Instead of relying exclusively on dividends, which may yield only a few percentage points, covered-call ETFs can advertise yields well into the high-single and double digits.

These strategies attracted considerable attention during the high-inflation, rising-rate bear market of 2022. High-flying growth stocks faltered, while rapidly rising interest rates created unusually large losses for traditional bond portfolios.…