Invest in Blue-Chip NASDAQ Stocks for an 11% Distribution Yield
The Global X NASDAQ 100 Covered Call ETF (QYLD) is a Solid Income Vehicle
With the recent weakness of the NASDAQ index relative to the S&P I have been looking for spots to add to some positions at good prices. My long-term core holdings Amazon and Alphabet Inc. have taken a rest in the last few days and I will be looking for spots to add to them, but today I wanted to talk about a related strategy.
I have been invested in the Global X NASDAQ 100 Covered Call Fund (QYLD) for almost two years now. The fund uses a covered-call strategy and overwrites 100% of the underlying stock portfolio. QYLD has generated annualized returns of 7.69% over the last five years. I think covered-call strategies make a lot of sense in this low rate environment we are currently in.
QYLD Price Chart
The basic idea behind a covered-call strategy is that you sell calls against stock that you own at strike prices over the current price. For example, today with the Nasdaq 100 (QQQ) ETF trading at about $287.50 you could sell a December 24, 2020 300 call for about $4.79. That…
