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QYLD: Covered Call ETF - 10.89% Yield

Published Fri, 17 Jul 2020 15:04:21 -0400 on Seeking Alpha

Seeking AlphaETF AnalysisQYLD: Covered Call ETF - 10.89% YieldJul. 17, 2020 3:04 PM ET|| About: Global X Funds - Global X Nasdaq 100 Covered Call ETF (QYLD)by: Juan de la HozJuan de la Hoz CEF/ETF Income LaboratoryCEF/ETF income and arbitrage strategies, 8%+ portfolio yieldsSummaryCovered call funds provide investors with strong yields, somewhat lower volatility, but less upside potential. Perfect for retirees and income investors.
QYLD is a covered call ETF investing in the tech-heavy Nasdaq-100 index.
The fund's 10.89% yield and comparatively strong returns make it a strong investment opportunity, although some of its peers are trading at cheaper levels.
The Global X Nasdaq 100 Covered Call ETF (QYLD) is an ETF which invests in the tech-heavy Nasdaq-100 index, and sells covered calls on its holdings. The fund's strong 10.89% dividend yield, defensive options strategy, and comparatively low level of risk and volatility make it a strong investment opportunity for most income investors and retirees, albeit one with little upside potential.
QYLD Basics
Sponsor: Global X Underlying Index: Nasdaq-100 Dividend Yield: 10.89% Expense Ratio: 0.60% Total Returns CAGR (Inception): 7.40% QYLD Overview
QYLD is an ETF that invests in the tech-heavy Nasdaq-100 index, as well as selling covered call options on said index. QYLD's choice of index and options strategy combine to create a higher-yield lower-risk lower-return fund when compared to equity indexes, with significant downside if tech underperforms.
Let's analyze the fund, starting by looking at its underlying index.
The Nasdaq-100 index is a stock market index which includes the 100 largest domestic and international non-financial companies listed on the Nasdaq Stock Market, that meet some basic liquidity, size, and regulatory requirements. The index has its own ETF, the Invesco QQQ ETF (QQQ). Index weights are based on market capitalization, with some assorted rules to ensure that the index is... Read more