QYLD Global X Nasdaq 100 Covered Call ETF is Great For Income Seeking Investors
πππOn a day when the US markets are down due to the geopolitical conflicts in the Middle East and Russia $NASDAQ 100 Covered Call ETF(QYLD)$ provides some cheer for income seeking investors like me. QYLD is going ex dividend on April 22 and the current dividend yield is 11.6%.
QYLD tracks an index that holds Nasdaq 100 stocks and sells call options on those stocks to collect premium.
In recent years Covered Calls ETFs are getting popular but QYLD is the first ETF to apply it to Nasdaq 100 Index. QYLD was started on December 12 2013 and has since grown to USD 8.19 billion in Assets Under Management. QYLD is the largest ETF of Global X due to its popularity.
The Top 10 holdings include the Magnificent 7 such $Microsoft(MSFT)$
Meta Platforms, Google, Tesla, Broadccom and Costco.
The Top 10 holdings weightage is 49%. Total number of holdings is 103.
The expense ratio is 0.61%.
A Covered Call Strategy involves taking a long position in the underlying asset and selling a call option on a share for share basis. The term "Buy-Write" describes buying the stock and simultaneously selling call options. This Options Strategy results in income from the Call Option sale.
This Options strategy is normally the domain of Big Financial Institutions and experienced traders. However with QYLD, small investors like me can enjoy the benefits without the complexities of trading options.
What I like about QYLD is that it has made monthly distributions 10 years running. QYLD does the heavy lifting for me, saving me time and expense of doing so individually, not to mention the potential loss if I make mistakes.
Performance wise QYLD is down 0.7% today and in the past 5 days it has dropped 1.45%. Year todate QYLD is up 2.7% and in 2023, QYLD has also risen by 2.3%.
However in providing income on a monthly basis by using a Covered Call Strategy, QYLD has limited its upside potential.
Since my goal is to generate monthly passive income, QYLD is perfect for me. For those who are seeking capital growth, QYLD may not be suitable for them. There is no right or wrong in investing. Every person has different goals and risk appetite.
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