There’s an ongoing shift in how investors access income through ETFs. No longer is sourcing income a pursuit centered solely on fixed income assets. Today, it increasingly includes the use of derivatives to boost yield and total return, and to capitalize on equity volatility.
In the ETF market, derivative income ETFs — the options-based strategies that rely on calls and/or put option overlays for income generation — are a fast-growing category of funds. Indeed, the category is a magnet for asset creation and product innovation.
The Trends in Option Income
In 2025, this still-young ETF segment picked up some $54 billion in net new assets, JP Morgan Asset Management data shows. Among actively managed ETFs, it was the single most popular category of funds. Now, it comprises some $130 billion in combined assets under management.
JPAM itself was among the early asset managers to develop income-seeking strategies through options. The JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) are among the market’s largest, most successful active derivative income ETFs today, with some $77 billion combined assets.
In a recent interview with my colleague Todd Rosenbluth, Hamilton Reiner, head of U.S. equity derivatives at J.P. Morgan Asset Management, noted that these ETFs are designed to provide income and some upside. They were developed at a time when fixed income investors were starved for yield. Their success in asset gathering and adoption speaks volumes to the viability of the approach.
Rosy Market Outlooks
Coming into 2026, JPAM was one of several asset managers sharing market outlooks referencing the opportunity in derivative income ETFs.
BlackRock, in its multi-asset income outlook, posed the question: “If easy income is over, what’s next?” The answer singled out covered call strategies as a solution to income generation problems.
“Cash isn’t paying what it used to – and we believe it could fall even further. In our view, this may create an opportunity,” Justin Christofel, co-head of income investing, multi-asset strategies & solutions at BlackRock said in the outlook. “We see the era of easy income fading; as a result diversified income portfolios may offer appealing yields and the potential for greater durability.”
“In our view, volatility may present opportunities to enhance income, depending on investor objectives and risk tolerance,” he said. “We express this view by allocating to covered call exposures that help convert equity volatility into income.” One of BlackRock’s strategies in this category is the iShares U.S. Large Cap Premium Income ETF (BALI). It offers exposure to large-cap names (big growth names) while selling call options to generate income.
Goldman Sachs, too, in its “Shifting Paradigms for Portfolio Construction in 2026” outlook, noted derivative income as a category to watch in 2026. That category could go hand in hand with an active approach to fixed income investing.
“We see further growth in the years ahead for derivative-income ETFs, which are designed to generate income from an equity portfolio with the use of options contracts,” the firm said in the outlook. “These funds have seen a surge of interest in 2025 from investors who want to remain invested in equities while seeking greater predictability of returns in uncertain markets.”
“Part of the appeal for investors is that these funds seek to pay out regular distributions, offering a source of income that is not tied to interest rates,” the firm added.
The Goldman Sachs S&P 500 Premium Income ETF (GPIX) is one example of the firm’s solutions to income generation. The fund delivers consistent monthly distributions from options premium and equity dividends. It has a 12-month trailing distribution rate of 8% and one year total returns of about 16%, according to GSAM data.
Other firms, too, have echoed similar views. Options-based income strategies are now part of many mainstream ETF investors’ tool kit.
Product Innovation Ongoing
Product innovation remains robust in this category as demand continues to grow. Asset managers of all sizes and expertise are developing new and unique tools to access derivative income and enhance total return.
One recent example comes courtesy of Amplify, a firm known for its thematic expertise and innovation track record.
Amplify is no stranger to breaking new ground. The firm was among the first to provide access to blockchain technology in an ETF wrapper, for example, nearly a decade ago with the Amplify Blockchain Technology ETF (BLOK). Its lineup of income-generating ETFs, including funds like the Amplify CWP Enhanced Dividend Income ETF (DIVO) and the Amplify CWP Growth & Income ETF (QDVO), has been equally innovative and pioneering.
These funds — large-cap portfolios (one tilts to value, one to growth) capturing dividend payers — also provide the manager the ability to write covered calls for additional income. DIVO and QDVO have been among the asset-gathering leaders for the firm, which saw its asset base grow 70% in 2025, far outpacing industry norms.
This year, Amplify has already made moves in the derivative income category again. It launched a new strategy that generates options-based income on a popular cybersecurity portfolio of stocks. The Amplify HACK Cybersecurity Covered Call ETF (HAKY) looks to capture capital appreciation tied to growth in cybersecurity names, and aims for 15% or greater annual covered call option premium, according to the firm.
“HAKY is an ETF that simply allows investors to participate in the rise of cybersecurity — very tied to AI and blockchain — but not being dependent fully on capital appreciation like all other cybersecurity ETFs,” Christian Magoon, founder and CEO of Amplify told me recently. “This is another demonstration of balancing option income and capital appreciation versus just capturing yield with little to no price appreciation potential.”
The firm also has added a covered call component to its existing Amplify Energy & Natural Resources Covered Call ETF (NDIV), adding what Magoon calls “another income engine” to an ETF that invests in dividend payers in the energy market.
“This additional yield potential — now over 10% versus 7% — adds a higher floor when it comes to total return in a sector that has had issues being in favor the last three years,” he said.
“We see more investors interested in seeking out investments that have a material portion of their total return from income — specifically option income due to the targeting of an income level that can occur through option writing and the often more favorable tax treatment of option income,” Magoon said.
Today, about half of Amplify ETF’s $19 billion of ETF AUM sits in funds that have some form of options overlay for income. It’s a category of ETFs that continues to drive product innovation and growth for the firm.
Amplify isn’t alone, either. NEOS, for example, just launched this week a trio number of “boosted” income ETFs — the NEOS Boosted Bitcoin High Income ETF (XBCI), the NEOS Boosted S&P 500 High Income ETF (XSPI) and the NEOS Boosted Nasdaq-100 High Income ETF (XQQI) — expanding its innovative footprint in the derivative income ETF category.
Product innovation has been steady and robust in the options-based ETF space. Turning to alternative sources of income beyond traditional fixed income is an increasingly mainstream pursuit. And if market outlooks are right, this is a part of the market that has just begun picking up steam.
Learn More
To explore the many strategies in the derivative income ETF category and to dive into specific solutions, begin your due diligence with ETF Database tools here. What’s more, consider joining us at Exchange next month to hear more from the providers themselves, and explore the trends and opportunities shaping up the pursuit of income in 2026. Find out more about conference here.
For more news, information, and analysis visit the Thematic Investing Content Hub.
Originally published on ETF Trends
VettaFi LLC (“VettaFi”) is the index provider for BLOK and NDIV, for which it receives an index licensing fee. However, BLOK and NDIV are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of BLOK or NDIV.
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