"Global X Nasdaq 100 Covered Call ETF ( NASDAQ:QYLD) transforms the Nasdaq-100's top technology stocks into an 11% monthly dividend by selling covered call options against its holdings. Unlike traditional dividend ETFs, QYLD generates income exclusively through option premiums. The fund sells near-the-money call options on its entire portfolio each month, collecting premiums from buyers who purchase the right to buy shares at specific strike prices. This strategy produces consistent monthly income but caps upside participation when tech stocks rally sharply."
"The fund's $8 billion portfolio concentrates heavily in technology at 57% of the total ETF, and communication services at 17%. The top holdings - Nvidia, Apple, Microsoft, Broadcom, Amazon, Alphabet, Tesla, and Meta Platforms - represent over half the fund and drive most option premium generation. Evaluating Income Sustainability QYLD's 11.5% yield depends entirely on market volatility, not underlying dividends."
QYLD generates income by selling near-the-money covered call options on its entire Nasdaq-100 portfolio each month and distributes option premiums as monthly payouts. The ETF holds about $8 billion with a heavy technology concentration (57%) and major positions in Nvidia, Apple, Microsoft and other large-cap tech names driving most premium generation. Payouts depend on implied volatility rather than underlying dividend cash flows, and monthly distributions have fallen from an average $0.198 in 2021 to roughly $0.169 amid lower volatility. The fund’s NAV has declined about 23% from its December 2021 peak due to capped upside in strong tech rallies.
Read at 24/7 Wall St.
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