Options are always overpriced. They're fundamentally an insurance product. You should expect to lose money when buying insurance. If you're hedging, you should expect to lose on your options leg. Same as with any insurance product.

Options are governed by tight mathematical relationships between each other and with their underlyings. These can be atomically arbitraged, i.e. you don't need someone else to believe your thesis to make money. As a retail investor, you are on the other side of a system designed to efficiently price and reprice options to ensure the dealer doesn't lose money.

> I'm told that covered-call ETFs generally underperform (in addition to being inefficient)

I haven't looked into covered-call ETFs, but my prior is strategy ETFs are bullshit even when the underlying strategy may not be.

> "generating income" is best accomplished by just selling shares as needed

Yes. (Or borrowing against them.)