SPYI vs QQQI: NEOS Covered Call ETFs Compared
NEOS built both funds around a distinctive tax-efficient structure using index options that get Section 1256 treatment — a meaningful advantage over JEPI/JEPQ for taxable accounts.
QQQI = higher yield (Nasdaq 100 options premium), higher volatility, tracks QQQ drawdowns. SPYI = lower yield, lower volatility, tracks SPY drawdowns. Both use index options with 60/40 long-term/short-term tax treatment, plus return-of-capital distributions — dramatically more tax-efficient than JEPI/JEPQ.
Quick stats
| Metric | SPYI | QQQI |
|---|---|---|
| Price | $52.55 | $53.89 |
| TTM yield | 11.74% | 13.88% |
| Real yield (NAV-adj.) | 13.91% | 16.89% |
| NAV change (period) | 18.4% | 21.7% |
| Annualized volatility | 1150.2% | 1474.3% |
| Distribution frequency | monthly | monthly |
| Expense ratio | 0.68% | 0.68% |
| Inception | 2022-08-30 | 2024-01-30 |
| AUM | ~$3B | ~$2B |
| 1Y dividend CAGR | 0.5% | 10.6% |
| 3Y dividend CAGR | 48.2% | — |
| 5Y dividend CAGR | — | — |
| 5Y price CAGR | — | — |
Strategy & holdings
NEOS's defining feature is how it generates income: the funds write out-of-the-money call options on the underlying index (S&P 500 for SPYI, Nasdaq 100 for QQQI). Because these are broad-based index options, they qualify for IRS Section 1256 treatment — 60% of gains are taxed as long-term capital gains regardless of holding period. NEOS also structures distributions to include a significant return-of-capital component, which defers tax rather than eliminating it but is still a meaningful taxable-account advantage over ELN-based funds.
Holds a replicating basket of S&P 500 stocks and writes short-dated SPX index call options for income. Uses Section 1256 index options for tax efficiency. Distributions target ~12% annually with significant return-of-capital component.
Same structure as SPYI but on the Nasdaq 100. Writes NDX index calls for income. Higher implied volatility on NDX produces higher premium income.
SPYI and QQQI are the tax-efficient answers to JEPI and JEPQ. Mechanically they are quite different: SPYI/QQQI write actual index options (SPX, NDX), while JEPI/JEPQ use equity-linked notes written by bank counterparties. The option-writing approach means SPYI/QQQI distributions get Section 1256 treatment — this is a real, substantial tax advantage that ELN-based distributions don't get. The tradeoff is higher expense ratios (0.68% vs 0.35% for JEPI/JEPQ) and less of an active equity management overlay. SPYI passively tracks the S&P 500 index composition; JEPI actively selects low-vol stocks. QQQI passively tracks the Nasdaq 100; JEPQ also passively tracks it.
Yield & distributions
QQQI typically yields 14-16% trailing, SPYI typically 11-13%. QQQI's higher yield reflects the larger premiums available on Nasdaq 100 options. Both distribute monthly. Distribution stability has been reasonable since inception, though QQQI's track record is shorter. Worth noting: NEOS targets a specific distribution rate, so distributions can include ROC rather than purely options premium in lean months.
Total return & NAV
Total return in both funds tracks their underlying index with a drag from capped upside. In a sideways or slightly-up market, the call premium supplements price return. In a strong bull market, short calls cap returns and the fund underperforms the index meaningfully. QQQI has gone through one big Nasdaq leg-up since inception and did lag QQQ's total return as expected. SPYI has had a longer track record and shows the typical covered-call pattern: beats SPY in sideways markets, lags in bull runs, protects modestly on the downside (call premium cushions losses).
Risk & volatility
QQQI is structurally higher risk because it tracks the Nasdaq 100. In a tech correction, QQQI falls with QQQ minus whatever premium it collects — expect 20-30% drawdowns in a serious tech bear. SPYI tracks the S&P 500 and has smaller drawdowns. Neither fund has a defensive sleeve like JEPI's low-vol overlay; both are essentially 'long the index, short some calls' which means full downside exposure with capped upside.
Tax treatment
This is where SPYI and QQQI shine versus JEPI/JEPQ. Section 1256 contracts (broad-based index options) are marked to market annually and taxed 60% long-term / 40% short-term regardless of actual holding period — a blended rate significantly lower than the ordinary income rate most JEPI/JEPQ distributions face. On top of that, NEOS structures distributions with a large return-of-capital portion, which defers taxes until you sell (and reduces your cost basis). The combined effect in a high tax bracket can be 5-10 percentage points of after-tax yield advantage.