QYLD ETF

QYLD uses a covered call strategy that provides steady double-digit returns, but it also restricts potential gains, which can hinder growth in rising markets. Although it offers dependable monthly payouts and has $8.67 billion in assets, QYLD is facing more competition and is not performing as well as newer ETFs like QQQI. Due to its declining price and limited growth potential, QYLD may need to rethink its strategy to stay competitive.

Investors looking for momentum might be interested in the Global X Nasdaq 100 Covered Call ETF QYLD. The fund recently reached a 52-week high and has increased by 17% from its lowest point of $15.91 per share over the past year.

Portfolios that aim for high returns often risk losing capital, which can lower their net asset value (NAV), as shown by QYLD's ongoing price drop and weak results. A long-term study on covered-options strategies reveals that these ETFs can reduce investors' total capital over time because they don't generate enough income and depend too much on capital returns. In 2023, QYLD lost nearly one-seventh of its market value due to poor options writing, and I suggest selling it strongly.

Following two years of yearly increases exceeding 20% for the S&P 500, financial analysts on Wall Street expect a more modest performance in 2025.

Kevin Green points out that SPX bulls can feel confident "for now." He also mentions that a quieter market day could provide the Nasdaq-100 Covered Call ETF (QYLD) with the strength to influence the NDX.

High yield covered call funds such as QYLD attract retirees who need less savings and offer dividends to help with living costs. However, QYLD's 12% yield may not be dependable for retirement because its payouts are inconsistent and do not keep up with inflation, complicating monthly budgeting. In contrast, SCHD offers a more reliable option with steady dividends that grow by 11% annually, which helps to outpace inflation over time.

Kevin Green suggests that liquidity allows bulls to feel more secure, but he warns that one factor could cause a market drop: the Global X NASDAQ 100 Covered Call ETF (QYLD).

The QYLD ETF sells at-the-money call options on the Nasdaq 100 Index to create high distribution yields, but its approach has weaknesses and tends to perform poorly over time. In contrast, QQQI has a more adaptable strategy that allows it to adjust the percentage of options written and use call spreads, resulting in better performance and higher distribution yields. Additionally, QDTE's strategy of using zero days to expiration call options could lead to greater daily returns and much higher income compared to QYLD.

This article changes my previous Sell rating on the Global X NASDAQ 100 Covered Call ETF to Hold. The main reasons for this change are the better return/risk balance due to the Fed's interest rate cuts and the increase in market volatility. Since my last update, QYLD's yield spread compared to 10-year treasury rates has increased to 7.7%.