Scoring Methodology

Last updated: March 2026 — Version 1.0

Every score is calculated from public market data. Every formula is published here. Anyone with the same data should reach the same conclusions.

Our Philosophy

CoveredRank evaluates covered call ETFs on objective, reproducible criteria. We have no financial relationship with any ETF issuer. No fund pays to be included or ranked higher. Transparency is the foundation of trust.

Universe

We cover diversified covered call ETFs listed in the United States with AUM above $500 million.

We exclude:

  • Single-stock covered call ETFs (TSLY, NVDY, etc.)
  • Bond covered call ETFs
  • Crypto covered call ETFs
  • Leveraged or inverse products
  • ETFs that sell volatility futures rather than equity covered calls

Benchmarks

BenchmarkETFs
SPY (S&P 500)JEPI, XYLD, SPYI, DIVO, GPIX, ISPY, PBP, FTHI, BALI, XYLG, SIXH, ETV, PUTW
QQQ (Nasdaq-100)JEPQ, QYLD, QQQI, GPIQ, QYLG, QQQX, KLIP
IWM (Russell 2000)RYLD, IWMI

All comparisons use total return (price + dividends reinvested) for both ETF and benchmark.

Time Windows

WindowDescriptionAvailability
Since InceptionFull history from ETF launchAll ETFs | Free
3 YearsRolling 36 monthsETFs with 3+ years | Pro
1 YearRolling 12 monthsAll ETFs | Pro
3 MonthsRolling 3 monthsAll ETFs | Pro

Maturity Rating

RatingDescription
2 starsLess than 2 years — interpret with caution
3 stars2 to 3 years
4 stars3 to 5 years
5 starsMore than 5 years — full cycle tested

The 6 Scoring Criteria

Criterion 1 — Total Return vs Benchmark (25%)

capture = etf_cumulative_return / benchmark_cumulative_return
score = min(10, max(0, capture × 10))

Example: JEPI returned +80.6% vs SPY +128.8% since inception → capture = 0.626 → score = 6.26

Why it matters: Total return capture over a full cycle is the most honest measure of long-term value.

Criterion 2 — Downside Protection (25%)

down_months = months where benchmark return < 0
etf_down = sum(etf returns in down months)
bench_down = sum(benchmark returns in down months)
protection = 1 - (etf_down / bench_down)
score = min(10, max(0, protection / 0.50 × 10))

Example: JEPI absorbed 61.7% of SPY's losses in down months → protection = 38.3% → score = 7.67

Verified: JEPI pipeline score = 7.67 ✓

Why it matters: This is the primary reason investors choose covered call ETFs. We measure whether that protection is real.

Criterion 3 — Upside Participation (25%)

up_months = months where benchmark return > 0
upside_ratio = sum(etf returns in up months) / 
               sum(benchmark returns in up months)
score = min(10, max(0, upside_ratio × 10))

Example: JEPI captured 65.8% of SPY's gains in up months → score = 6.58

Why it matters: Covered calls structurally cap upside. This criterion measures the cost of that cap.

Criterion 4 — Distribution Consistency (15%)

cuts = months where distribution < previous × 0.85
score = max(0, 10 × (1 - cuts / total_months))

Why it matters: Income investors depend on predictable cash flow. Frequent cuts undermine the core value proposition.

Criterion 5 — Expense Ratio (5%)

score = max(0, min(10, 10 × (1 - (ter - 0.20) / 0.80)))

Examples:

  • GPIX/GPIQ at 0.29% → score = 8.88
  • JEPI/JEPQ at 0.35% → score = 8.12
  • SPYI/QQQI at 0.68% → score = 4.00
  • FTHI at 0.85% → score = 1.88

Why it matters: Fees compound over time and directly reduce net returns.

Criterion 6 — Liquidity/AUM (5%)

score = min(10, log10(aum_millions) / log10(50000) × 10)

Why it matters: Larger funds have tighter bid-ask spreads and lower risk of closure.

Final Score Formula

score_final = (
  Total Return × 0.25 +
  Downside Protection × 0.25 +
  Upside Participation × 0.25 +
  Consistency × 0.15 +
  Expense Ratio × 0.05 +
  Liquidity × 0.05
) × 10

All scores on a 0-10 scale.

Data Sources

DataSourceFrequency
Monthly pricesYahoo Finance via yfinanceMonthly
DistributionsYahoo Finance via yfinanceMonthly
Expense ratiosETF issuer prospectusesAnnual
AUMETF issuer websitesMonthly

Known Limitations

  1. Bull market bias: 2020-2025 was an exceptional bull market. ETFs launched during this period may not reflect performance across a full cycle.
  2. Short track records: ETFs with 2 stars should be interpreted with caution. QQQI and GPIQ have not experienced a 2022-style correction.
  3. Price return only for distributions: Yahoo Finance adjusted close prices include dividends but may have minor discrepancies vs actual distribution amounts.

Planned V2 Improvements

  • CBOE BXM/BXMD as secondary benchmarks
  • Tax efficiency scoring (Section 1256 vs ordinary income)
  • Rolling Sharpe ratio by time window
  • Correlation matrix between ETFs
  • Comparison tool (/compare)

Disclaimer: CoveredRank provides independent educational content only. Not financial advice.

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