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S&P 500   4,076.57
DOW   34,395.01
QQQ   293.72
Is Apple Going To Rally Into Year End?
The single greatest medical breakthrough of all time? (Ad)
25 Ways to Improve Your Financial Situation in 1 Hour
La-Z-Boy Reclines To More Comfortable Levels 
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Are the Short Sellers Still Right About Mullen Automotive stock? 
Is The Recovery Rally Here For SoFi?
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Biden administration presses senators to avert rail strike
Trump Org. defense lawyer scolded for using struck testimony
S&P 500   4,076.57
DOW   34,395.01
QQQ   293.72
Is Apple Going To Rally Into Year End?
The single greatest medical breakthrough of all time? (Ad)
25 Ways to Improve Your Financial Situation in 1 Hour
La-Z-Boy Reclines To More Comfortable Levels 
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Are the Short Sellers Still Right About Mullen Automotive stock? 
Is The Recovery Rally Here For SoFi?
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Biden administration presses senators to avert rail strike
Trump Org. defense lawyer scolded for using struck testimony
S&P 500   4,076.57
DOW   34,395.01
QQQ   293.72
Is Apple Going To Rally Into Year End?
The single greatest medical breakthrough of all time? (Ad)
25 Ways to Improve Your Financial Situation in 1 Hour
La-Z-Boy Reclines To More Comfortable Levels 
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Are the Short Sellers Still Right About Mullen Automotive stock? 
Is The Recovery Rally Here For SoFi?
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Biden administration presses senators to avert rail strike
Trump Org. defense lawyer scolded for using struck testimony

Want to Get a 10%  Dividend Yield, Look Here

Key Points

  • The Global X NASDAQ 100 Covered Call ETF yields more than 10%. 
  • The ETF tracks the CBOE NASDAQ 100 Buy-Write Index with Full Replication. 
  • While attractive, the yield comes with risks that include capital erosion. 
Want to Get a 10%  Dividend Yield, Look Here

If you want to invest in covered calls the Global X Funds NASDAQ 100 ETF (NASDAQ: QYLD) is something you should check out. Better yet, if you want to get a high double-digit yield in a stock with a long track record of successive monthly dividend payments this should be on your list. It is an ETF that is based on the CBOE NASDAQ 100 Buy-Write Index which seeks to mimic a portfolio of covered call trades based on NASDAQ 100 (NYSEARCA: QQQM) stocks. The key takeaway is that this ETF tends to pay $0.16 to $0.19 per month in yield which is worth upwards of 10% depending on the share price. 

What Is A Covered Call And Why You Should Care 

A covered call is one of the simplest options strategies an investor can take advantage of. Options are derivative trading instruments that allow an investor to “rent” stocks for cheaper than what they cost to buy. The salient point is that if the underlying stock moves higher in price a call option will also move higher in price and vice versa. Call options, versus a put option, is a derivative trading contract used by bullish speculators to capture upward price movement and by investors to generate cash. An investor in an “optionable” stock can sell one call option for every 100 shares of stock they own. 

Naturally, if the options sell for $0.50 per share or $50 per contract compared to $10 per share to buy or $1000 per covered call it is an attractive trade that can make 5% or more in 30 days or less. If the call option sold is at a higher strike or selling price than the stock was purchased for the potential earnings multiply. The hurdle for investors is the amount of capital it can take to generate that 5% on a consistent monthly basis which is why the Global X Funds NASDAQ 100 Covered Call ETF exists today. It takes the burden of not only finding the covered call trades but of managing the portfolio. The only requirement for investors is to buy and hold the stock which is where the risk lay. 


The Risk Of Covered Calls:  Capital Erosion 

Earning the 5% monthly return of a covered call is attractive but it does come with risks. If the stock moves higher and the options is “exercised” which means you have to sell it then good, you have probably sold it at a higher price than it was purchased for and made the maximum profit for the trade. The downside is that the stock price will not move higher and not get exercised. In this case, you’ve earned the 5% for selling the call but what about the underlying stock? In the case of the NASDAQ 100, which is tech-heavy and down 30% YOY, there would be significant capital erosion within the portfolio and that can be seen in the ETF price action. 

Net Asset Value is an important metric to watch in an ETF of this nature. The fund has more than $6.4 billion under management as of 9/30/3033 which is up since inception and versus 5 years ago but down slightly in the 3-year comparison and down nearly 20% in the 1-year comparison and that figure could grow before the market begins to rebound. 

The Technical Outlook: QYLD At A Bottom 

The QYLD has done little but trend lower since its inception and that may continue due to the generally bearish conditions on Wall Street. The upshot is that, for each major dip, there has been a significant rebound in the action and that is where the stock is now. At a bottom with a potential rebound in the works. 

Want to Get a 10%  Dividend Yield - Look Here QYLD: NASDAQ

Should you invest $1,000 in Global X Nasdaq 100 Covered Call ETF right now?

Before you consider Global X Nasdaq 100 Covered Call ETF, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Global X Nasdaq 100 Covered Call ETF wasn't on the list.

While Global X Nasdaq 100 Covered Call ETF currently has a "N/A" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Global X Nasdaq 100 Covered Call ETF (QYLD)N/A$16.61+0.2%16.56%N/AN/AN/A
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Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.