NDIV uses covered calls to generate income in volatile markets

Amplify’s Energy & Natural Resources Covered Call ETF (NDIV) holds shares of energy and natural resource companies and systematically writes covered call options on those holdings to generate income. The fund combines premiums from option sales with dividends from its underlying stocks.

Renewed hostilities in the Middle East and the prospect of additional U.S. sanctions on Iran have added a risk premium to crude markets in recent weeks. At the same time, OPEC+ has adjusted production levels and emphasized flexibility in future output, creating shifting supply expectations and larger day-to-day price swings for oil and related equities. Those developments have pushed implied volatility higher on options linked to energy names.

Higher implied volatility raises the price of call options. When option prices are higher, NDIV receives larger premiums for the covered calls it writes. YCharts data shows the fund had a 7.14% distribution yield and a 5.23% 30-day SEC yield as of June 30, 2026.

The covered call approach is designed to produce income when markets trade sideways or experience frequent swings. The tradeoff is that selling calls limits gains above the option strike, so the fund does not fully capture the upside of sharp rallies in energy stocks.

Traditional energy ETFs such as the Energy Select Sector SPDR Fund (XLE) rely mainly on stock price appreciation and dividends for returns. NDIV adds an options overlay to seek supplemental premium income in addition to dividend income.

NDIV’s income profile is sensitive to movements in commodity-driven equities and to option market pricing. If implied volatility falls, premiums on calls typically shrink and the fund’s yield can compress. VettaFi LLC serves as the index provider for NDIV and receives an index licensing fee; VettaFi does not issue, sponsor or trade the ETF.