PIMCO 25 Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund (ZROZ) Covered Calls

PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF provides exposure to long-term U.S. Treasury STRIPS with remaining maturities of 25 years or more. By investing in zero-coupon bonds, the fund offers one of the highest duration profiles available in the ETF market, making it extremely sensitive to changes in interest rates. It is a tactical tool for investors looking to capitalize on falling rates or to hedge long-term liabilities.

You can sell covered calls on PIMCO 25 Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for ZROZ (prices last updated Mon 4:16 PM ET):

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Core Business and Products

PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ) is a specialized fixed-income powerhouse designed for maximum interest rate sensitivity. The fund tracks the ICE BofA Long US Treasury Principal STRIPS Index, which consists of U.S. Treasury "STRIPS" (Separate Trading of Registered Interest and Principal of Securities). These are zero-coupon bonds that do not pay periodic interest; instead, they are sold at a deep discount and mature at face value. As of April 2026, the fund manages approximately $1.4 billion in assets.

The primary appeal of ZROZ is its extreme duration. Because zero-coupon bonds have no intermediate cash flows, their price sensitivity to interest rate movements is maximized. For every 1% move in long-term interest rates, ZROZ can be expected to move significantly more than standard long-term bond funds like TLT. This makes it a high-beta instrument within the "safe-haven" Treasury complex, often used by macro traders to express a pure view on the direction of the long end of the yield curve.

Competitive Landscape

ZROZ is a leader in the "Extended Duration" category. While it is fully optionable, its options volume is specialized, typically catering to institutional hedgers and sophisticated retail traders. With an expense ratio of 0.15%, it is competitively priced for a high-convexity product. In 2026, it competes primarily with other "STRIPS" focused funds and ultra-long-term Treasury vehicles.

Key peers and related long-duration vehicles include:

1. iShares 20+ Year Treasury Bond ETF: The liquid benchmark for long-term Treasuries, though it has lower duration than ZROZ due to its coupon-paying bonds.
2. iShares 25+ Year Treasury STRIPS Bond ETF: A direct competitor that also focuses on the 25+ year STRIPS segment with a lower 0.10% fee.
3. Vanguard Extended Duration Treasury ETF: A major peer that targets a similar high-duration profile using Treasury STRIPS.
4. Direxion Daily 20+ Year Treasury Bull 3X Shares: A leveraged peer for those seeking even greater volatility through 3x daily returns.
5. PIMCO 15+ Year US TIPS Index ETF: A sibling fund focusing on long-term inflation-protected securities.

Strategic Outlook and Innovation

In the 2026 economic environment, ZROZ is a "recession-hedge" staple. As the Federal Reserve navigates the tail end of its policy cycle, ZROZ has seen significant tactical inflows from investors positioning for a return to lower long-term yields. The fund’s quarterly distribution—most recently $0.82 in April 2026—represents the "accretion" of the deep discount on its underlying bonds, providing an annualized yield of approximately 5.1%.

Innovation at PIMCO involves the meticulous management of the fund’s "roll" as bonds approach the 25-year maturity threshold. By maintaining a pure-play exposure to the furthest point on the U.S. sovereign curve, ZROZ serves as a vital component for "Liability Driven Investment" (LDI) strategies and as a capital-efficient way to add bond exposure to a diversified 60/40 portfolio. For investors in 2026, ZROZ remains the premier "volatility-rich" way to own the world’s safest credit.

Want more examples? ZM Covered Calls | ZS Covered Calls