QYLD ETF

Diversified portfolios with high yields often compromise on capital, leading to NAV degradation, as seen with QYLD's persistent price decline and poor performance. The longest running study on covered-options strategy demonstrates that these ETFs erode investors' total capital over time due to insufficient income generation and reliance on capital returns. QYLD lost almost 1/7th of its market cap due to sub-par options writing in 2023. The ETF may never recover, and I recommend a "strong sell".

After two years of annual gains topping 20% for the S&P 500, Wall Street experts anticipate a moderate performance in 2025.

Kevin Green highlights where SPX bulls can have a confidence, "for now." As for the NDX, he says a duller market day can give the Nasdaq-100 Covered Call ETF (QYLD) enough power to shake up the index.

High yield covered call funds like QYLD appeal to retirees with lower required savings and promising dividends to cover living expenses. But, QYLD's 12% yield looks unreliable for retirement due to inconsistent and non-growing distributions when adjusted for inflation, making monthly budget planning a nightmare. SCHD provides a much better deal with consistent dividends growing at 11% a year, beating inflation long-term.

According to Kevin Green, liquidity is giving bulls enough room "to hang their hat on," but one name could plunge markets: the Global X NASDAQ 100 Covered Call ETF (QYLD).

QYLD ETF writes ATM call options on the Nasdaq 100 Index to generate high distribution yields. However, its strategy is flawed and underperforms over the long run. Compared to QYLD, QQQI's flexible mandate to vary overwritten percentages and use call spreads offers superior performance and higher distribution yield than QYLD. QDTE's 0DTE call options strategy may capture more day-to-day returns and generate significantly higher income than QYLD.

This article upgrades my early Sell rating on Global X NASDAQ 100 Covered Call ETF to Hold. The key considerations involved in this upgrade is the improved return/risk profile thanks to the Fed rate cuts and the return of market volatility. QYLD's yield spread relative to 10-year treasury rates has widened to 7.7% since my last writing.

The Global X Nasdaq 100 Covered Call ETF (QYLD) aims to generate income by selling call options on Nasdaq 100 stocks. QYLD offers monthly distributions and can provide protection during market downturns, but caps potential gains in strong bull markets. The fund's focus on tech stocks exposes it to sector-specific risks, and its higher expense ratio (0.61%) can impact net returns.

QYLD is a strong income-generating ETF but has limited upside potential due to its covered call strategy, leading to a perpetual share price decline. I am now neutral on QYLD, preferring ETFs like QQQI and JEPQ that allow for some capital appreciation while generating income. Despite QYLD's price erosion, it has achieved its goal of consistent monthly distributions, producing 98.82% of its initial share price in income.