Most Covered Call Funds Sacrifice Upside for Yield. This Nasdaq-based ETF Flips the Script.

1. What is ProShares Nasdaq-100 High Income ETF?

ProShares Nasdaq-100 High Income ETF (Ticker: IQQQ) targets high income potential by employing a daily covered call strategy. In addition to generating monthly income for investors, IQQQ also seeks long-term returns consistent with the Nasdaq-100 Index®. The ETF pursues a differentiated approach: Unlike traditional covered call ETFs, which often sacrifice upside for yield, IQQQ targets both high income and attractive long-term total return potential.
 

2. What was the opportunity you saw that led to the ProShares' launch of IQQQ – Nasdaq-100 High Income ETF?

Traditional covered call strategies have been based on writing monthly options on the underlying index—in this case, the Nasdaq-100®. The problem with this approach is that it gives away substantial upside participation in its quest for income. For instance, if the price of a stock index rises and stays above the strike price early in the month, the strategy may miss out on a stock market rally for days or even weeks, until the call option expires. 
This can be a significant drawback for achieving long-term total return objectives. Indeed, the numbers are dramatic: For the past 10 years ending in October 2025, a buy-write strategy using monthly options on the Nasdaq-100 rose by 149%, vs. 512% for the Nasdaq-100 itself  . In other words, a classic covered call approach to the Nasdaq-100 left over two-thirds of total return on the table. 
The good news is that there’s a clear opportunity to address (and largely overcome) these challenges with a new tool: daily options. By resetting the strike level each day, daily options allow for greater potential upside in a rising market.
 

3. Many investors have perceived traditional covered call strategies as defensive - how should we think about IQQQ?

While it’s often believed that traditional monthly covered call strategies are defensive, the facts suggest this “protection” is somewhat illusory. From 2014 to 2024, the CBOE S&P 500 BuyWrite Index has captured 84% of the downside of the S&P 500, while only returning 65% of the upside. Any protection offered has been more than offset by missed long-term gains. (For a more detailed discussion on this phenomenon, see Covered Call ETFs: The Myth of Downside Protection).

During the pandemic, interest rates along the curve were at rock-bottom levels and didn’t provide a hedge against equity risk. Now that bonds aren't broken anymore (i.e. yields have normalized), traditional asset allocation may be the more efficient way to manage risk for investors who want a defensive element to their portfolio.
 

4. How should investors use IQQQ in a portfolio?

IQQQ may be thought of as simply equity compared to a traditional covered call strategy that is more of a hybrid approach, lying somewhere between stocks and bonds. The ProShares high-income suite is driven by daily options and offers meaningfully distinct performance profiles, allowing for a diversified equity income approach. Another advantage to an ETF like IQQQ is that it offers income that is uncorrelated with interest rates—a feature that is particularly important as the Fed continues with its easing cycle.
 

5. What type of investors may be interested in IQQQ?

Investors who seek the potential for compelling income alongside substantial exposure to the Nasdaq-100 may be interested in IQQQ. IQQQ is an important member of ProShares’ high-income suite and stands out for its link to the growth-heavy Nasdaq-100, as well as the elevated option premiums that stem from the index’s somewhat higher volatility compared to other equity indices. So, this ETF may be ideal for investors who want income as well as the potential for outperformance that the Nasdaq-100 has delivered in the past two decades.

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