QYLD: Don’t Be Seduced By This 10% Yielder

Covered call writing as it pertains to individual stocks can be a particularly effective strategy if the holder is effective at analyzing the risk/reward proposition of the trade. The ETFs that have attempted a covered call strategy on a large index like the S&P 500 or NASDAQ 100, however, have been largely subpar.


Such is the case for the Recon Capital NASDAQ 100 Covered Call ETF (NASDAQ:QYLD). This fund holds a long position in the NASDAQ 100 (NASDAQ:QQQ) index while simultaneously writing short term out of the money call options on the index in order to boost income. The primary issue with the fund isn't necessarily that it's using a buy/write strategy, it's the way it's executing the strategy.

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