Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX) Stock

The Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX) seeks to deliver attractive returns with less volatility than the Nasdaq 100. QQQX has struggled to deliver less volatility than the Nasdaq 100 historically. The fund has a high expense ratio compared to other similar products.

The Nuveen NASDAQ 100 Dynamic Overwrite Fund has provided consistent performance and distributions for nearly two decades. This covered call fund maintains exposure to a diverse set of holdings, mostly focused on tech. QQQX trades at an attractive discount to NAV, presenting a rare opportunity to accumulate shares for higher yield and potential upside.

As a contrarian dividend investor, I've always looked to buy when media-driven worries run directly counter to the data.

QQQX uses a call-overwrite strategy to generate income and lower portfolio volatility for investors. Despite the Nasdaq 100 Index underperforming this year, QQQX has lagged behind the S&P 500. However, I see QQQX's 10% discount to NAV as a great opportunity for investors to have a "margin of safety."

Once again, the media has latched onto a new story to instill fear in investors and attract attention.

Don't Be Surprised If Nuveen Raises QQQX's Distribution

QQQX fund has historically underperformed compared to mechanical overwrite funds like QYLG. However, the QQQX fund is currently trading at a historically wide 7% discount to net asset value. Despite NAV underperformance, the discount to NAV presents a buying opportunity for income-oriented investors, assuming this discount will close in the coming months.

The Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX) is an equity buy-write fund with cash holdings that aim to mirror the Nasdaq 100 Index. QQQX gives up most of the upside due to its option overlay and tight deltas of the call options which cover 53% of the portfolio. The fund's strategy provides little downside mitigation and its performance lags behind the index and other technology-focused closed-end funds.

Covered call overlays tend to do better in volatile down markets, and lag in bull markets. A majority of Nuveen NASDAQ 100 Dynamic Overwrite Fund's composition belongs to either the tech sector or communication services. It might make sense to rotate to Nuveen NASDAQ 100 Dynamic Overwrite Fund for the relative downside protection.