Brad I agree 100% these ETFS are the definition of a yield trap value goes down your own money is given back to you and ordinary taxes... once all your money is given back then 100% of they money you get is ordinary dividends. I have some BDCs like GLAD and GAIN but I take those dividends and buy Qualified dividend stocks with them because of taxes.
Agreed! QYLD eats itself. I found this out a few months after buying 1k shares for around $22 each. The stock market then tanked after said purchase (of course). Now, it looks like the most QYLD could possibly rebound, based on the downward-sloping trend line is near $19 per share equating to a $3k loss at best. A tough lesson to learn! This video will help others. Much appreciated, Brad!
I own 3900 shares of Qyld at $21.11 it's a long play for me along with others I am getting $2800 to $3500 its for income along with my other shares I am 53 and retired. All my wife and my stocks are in our 457 plans . 3900 shares paying say .18 cents return 702 a month for yearly return of $8424 a year which in 1.5 years made up for the loss but with that said its for income and we are enjoying life with our house paid off it's been a blessing and that income been fantastic.
You didn't actually lose $3k. You got paid the whole time u held. Instead of getting paid thru selling your capital appreciation you got paid income. So the actually loss is a lot less.
If you buy QYLD hoping for share price appreciation you are a fool. Capital growth is literally the complete opposite of the intention of the fund 🤦♂️😂 QYLD is strictly an income / retirement play
I’m glad I watched this before investing in this ETF. I think waiting for the full premium every month is foolish, especially if you’re able to walk away with 75% of the premium mid way through.
This is the first video I've seen about QYLD that gets it right. People expect QYLD to provide steady income like a dividend-paying stock. With a dividend-paying stock, if the price drops, the dividend stays constant (as long as the dividend is based on profit and not selling shares, going into debt, etc.), and the yield rises. With QYLD, it won't behave the same way, as the price goes down, the yield stays constant (and hence you lose income).
Personally, I disagree with some of your points in this video. The equivalent ETFs that do not do covered calls do have a total value higher than their covered call equivalents over time for some of the reasons explained in the video (taxes / higher management expenses). I don't think your analysis is comparing apples to apples. Total growth, stock appreciation + distributions, is what you aim to get for your portfolio. The total between the two is the factor you are seeking for not either appreciating stock price or dividends only. Typically the strategy for growing a covered call portfolio is reinvesting the dividends to add more total stocks, either through a drip or by manually reinvesting dividends. If you add more owned stocks to your portfolio from your dividends, the total value of your holding goes up. That would be a more accurate measurement of total growth. By reinvesting the dividends, QYLD has a yearly total growth of around 8.17% as of Aug 6 2022. $10,000 would turn into around $19,497. I could have done a better job of going through all the dividends to more accurately do this, so feel free to roast me in the comments. With reinvesting the dividends in QQQ you do get a higher total growth with lower taxes. Total growth with QQQ is around 9.29%, and your $10,000 investment invested at the same inception point as QYLD started would turn into 21,285. Again, I could have done a better job going through all the dividends more accurately. Basically, QQQ gets a higher total gain over time and has better tax benefits. QYLD has lower total gain and tax benefits, but the mechanism for getting cashflow is simpler. There might be slight downside protection for flat and down markets, but I wouldn't know how to qualify it with real-world results. I would also challenge you to look at other covered call ETF's to say all are "depreciating assets". RYLD and XYLD are covered call ETF's with mostly flat stock prices. Both of these have had a small appreciated stock price since their inception. The expectation for these ETF's should be flat or slight losses or gains. I do invest in covered call ETFs as I have some different goals than using investments as a store of value to make larger purchases or for retirement. As well I am Canadian, and there are different taxation rules for dividends and different regulations for tax-preferred accounts. In Canada, there are 3 tax types for dividends, qualified dividends (100% income taxed), capital gains (50% of income taxed), and Return on Capital (0% income taxed). Return on capital is literally returning capital or tax loss harvesting losses on capital gains. Certain ETFs and split corporations that I invest in state how each dividend is taxed every year. Specifically, the split corporations I own tend to have 75% of returns as return on capital and 25% dividend income, a tax rate of 25% of income. SBC from Brompton is an example of split corp that does this. I would also say that covered call ETFs tend to have better tax advantages than dividend stocks because the different types of tax rates for dividends. The Canadian tax-favored accounts, also have some different rules. The TFSA, the Canadian equivalent of the Roth IRA, and the RRSP, the Canadian equivalent of the Traditional 401k, don't have age restrictions for withdrawals. Shorter-term strategies can be used with these accounts, instead of waiting until you are 59.5 years old. As well, the RRSP can be contributed with after-tax money outside your income. I use my dividends from my after-tax account, to contribute to my RRSP, and the dividends help reduce my total tax burden better than holding growth stocks. Also, I have a goal of using my dividends to live abroad temporarily in the next 3-5 years. Aiming for monthly dividend returns, instead of capital growth is easier to plan for this venture. If I had a large purchase like a house, I was planning for, I would use growth stocks or ETF's so I could more accurately hit that target. I'd also be lying if liquidating a few shares of my portfolio to live off of makes me nervous. I know logically the 4% rule for stock portfolios is a safe way to use growth stocks to live off, but it would make me nervous, especially going into a down market. Just some food for thought, and everyone out there is trying to do what is personally best for their situation. I appreciate your videos and have watched a few in the past. I just had to comment on this one, because I don't think your analysis makes sense.
@@BradFinn It was hard to separate out QYLD functionality from your rant about it as evidenced by such replies. Comparing something that someone doesn't understand (QYLD) to something else they don't understand (covered calls) doesn't do much to help their understanding.
USOI? I hope you're joking. Although, I must admit USOI high yield is attractive, the cyclical nature of a ETF tied to oil makes it high risk. I have QYLD and USOI in my portfolio, but only a percentage. I use the income from them to buy traditional dividend stocks and pay down my margin account. Between the two they generate about $250 per month...
This makes a lot sense. I have 156 shares of QYLD at over 21.00 average per share. I receive about 26 a month in distribution. I'm down approximately 10 percent in value. After watching this, I'm considering selling a call on my shares and buying a leaps on something else to sell covered calls on. I'm guessing I would average more than 26 a month with this strategy instead if I can find a quality stock to do it with. Thanks for your sharing your thoughts on QYLD.
Hahaha I love your intensity to your reason. It’s so genuine. That’s how i feel trying to explain things to family members who know nothing about investing and are stuck in the Stone Age of “save money in the bank and work hard”😂😂 makes my blood boil cause they refuse to understand what I have learned.
Right on Charles.. im glad its back too.. there will always be hype.. Fish like easy shinny objects that look like a gift.... the sharks patiently wait for them to come out of hiding before having a nice meal!
I ran a back test on qyld and if you put 10k when it launched and reinvested the distributions, it would be worth 17k today. Not great for growth but isn't correct saying it is just return of capital.
What would it be worth if if you didn't reinvest the distributions? At some point it would be nice to be able to receive the distributions as income without reducing the portfolio.
Good points on distribution yield and the covered call aspect but I do believe it will recover to the trend down up near 20. I think it's an easy rebound play from bottom to a return to trend plus the divy pay out. It's not going to return to highs nor will it ever with its structure but it's going to bounce off bottom just like it did after March of 2020. It does work for growth if you have a large enough share count. Also getting paid 12% a year while it's down 20% on the underlying. With s&p or qqq you're down 20% period.
You have explained this concept better than any other UA-camr so far and I've watched at least a dozen UA-cam videos of UA-camrs not liking you yld for this reason but you bust it down and explain it the best out of anyone I've seen yet. Good content
Brad, I totally get all of your points. One thing I see many people do in their analysis is not include dividend/distribution reinvestment in the return. (I'm not saying that you are doing that.) A chart showing QYLD vs QQQ doesn't tell us the bottom line of QYLD + reinvestment vs. QQQ. Personally, I'm thinking of buying some RYLD right now with full reinvestment. Possibly, the Russell is better than the Nasdaq for this strategy? I'm learning options but I'm not ready yet to find all my own stocks and write my own covered calls.
This is a really useful and informative video. Thanks for the honest opinion! Do you view something like JEPI differently? Share price up 13% since debut in 2020, and slightly lower expense ratio than QYLD. I'd be interested to know if JPMorgan Chase manages a covered call ETF better than Global X does.
As I mentioned in the video, not really looking for something compreable. I’ll just do the calls myself and not worry about how they operate their fund. I’ve never looked into JEPI
I own QYLD in a retirement account and disagree with you that its stock price will not increase over time. As of the close on 8/5/22, QYLD has increased to $18.47 from its closing low of $17.13 on 6/16/22, increase of about 7.25% while still paying the approximate 10% distribution. During the previous bear cycle, QYLD increased from is closing low of $17.99 on 3/16/20 to the start of the current bear cycle in QQQ that began on about 1/4/22 to $22.22 or about 19% while paying the distribution. When the current uptrend in QYLD eventually ends as evidenced by a series of lower highs and lower lows on a daily chart, I will consider selling my position in anticpation of buying back when a an uptrend resumes. However, even if an investor does not sell in a downtrend, they may still do ok by reinvesting the distributions during bear phases by essentially buying additional shares at lower prices. Brad, I appreciate your videos and even this one has started my thinking that maybe QYLG would be a better alternative in order to capture more upside in uptrending markets along with about 50% of the distribution. Thanks.
The mistake Brad is making is he's thinking of QYLD as an equity instrument but it actually makes more sense to view it as a quasi fixed income What fixed income instruments do you know will pay you 10%+ pa with guarantee you will get paid every month
Damnit Brad! Why you gotta make so much sense!! Ugggh I was finally feelin like I was getting somewhere!! Lol good video I gotta reevaluate...my whole life now! Good day SIR!
QYLD is not for growth. If you have a lot of money and are looking for income, I think it has a role to play in a portfolio. Just understand you are not going to get the appreciation you would in regular stock funds/ETFs. I do agree with you on not following a get rich quick approach. I have become well off by saving a lot for 30 years and automatically dollar cost averaging every month for those 30 years. That has allowed me to play with something like QYLD, but I sure don't threaten my portfolio or my financial security by being in it due to scale and percentage allocated.
So what ur saying is that if you have a lot of money, you don’t have a problem giving it to me and letting me give it back to you slowing and just call it a “dividend”. Makes sense
@@BradFinn Lets say I invest $100k in QYLD and get a 10% distribution and the market and QYLD price is flat for that year and I then sell. I made 10% return on my principal. Let's say I was in another stock or ETF that did nothing (as the market is flat or down, either one) and paid minimal dividend in the same timeframe. QYLD investor comes out ahead.
QYLD, RYLD, XYLD, JEPI, MAIN, DLN, DIV...sell a put with the highest premium, collect the premium, then use it to purchase shares, then dca while collecting my monthly dividends. That's my strategy. $300 monthly dividends isn't bad between all of them. Buy and hold forever with future appreciation hopefully. Win, win! Put and call credit spreads are part of the strategy also.
I dumped my entire YLD's back when it was $20 (with a cost basis of $22 so on a loss) and never looked back. I'm doing my own premium selling and it's SO MUCH better
@Brad Finn I am coming back to this post to say you were right! I couldn’t find my original post, but after digging and really understanding this you are absolutely correct on this video thanks for the content and keep up the great work
Thx for the video! Is JEPI any different than QYLD from strategy perspective? The declining value of QYLD doesn’t look good to me, wonder if JEPI is the same nature?
Awesome vid I been debating about QYLD, your last vid about his beginner socks for the wheel was 7 months ago I believe are those still viable or have things change due to the bear market? I want to get into it and want to start buying a few here and there till I have 100.
Great explanation. Love your enthusiasm. Have made more money with the wheel strategy that I learned from you. Holding my qyld for now. Selling on up days to lessen the pain of the loss
I did own this, I was in at 21.60 owned 200 shares was selling monthly calls on it to pay that exp.rate, I bought back in when it was in the low 17.00 range lowered its cost base to into the 19s then sold calls on all the shares tell I beat my loss on it with divided , actually just sold all the shares last week . I made money on it but not like I expected too . Wasn't expecting tech to take such a hit and qyld sells its calls on tech . Was why I thought it would do good. Nope unfortunately I had bad timing..
Disagree. This fund is not for making Capital gains (agree on that), It's for producing income over time. You will not get wealthy investing in this fund, but if you already have wealth and have a dividend investing strategy, it is a cash machine that out runs the Capital side over time. Do the math, it all works. There are a ton of assumptions in this video, most don't fire off of data, and strategy only "I don't know" and you should trade options instead. I do both QYLD and trade Options, both are viable if you have the right strategy and mindset. QYLD price does recover during Bull runs, it does not keep up with the Qs, but the Qs don't pay my expenses each month and both Options and QYLD have the same tax implications,. One key is you have to buy QYLD at it's lows, I agree, if you bought at the highs, principle reduction is a problem, but again, it's an income not get rich strategy. So, you can't look at this as black and white, good or bad, it's much more complicated than that.
Well after making my other comment on here 2 days ago, I don't think I'm going to touch any of the YLD funds in any account, tax-free or not... Would rather just keep selling covered calls on individual stocks I hold and have more control over choosing where to set my strike price and ensuring my strike prices are always above my cost basis. I'll just use the premium and dividend income to buy into more stocks or ETFs that may be a better alternative to the YLD funds.. JEPI and JEPQ, SCHD, possibly SCHG are still on my radar but not fully decided whether or not I want to throw money into any of those funds either, or just throw my dividend and covered call premiums into individual stocks and non-covered call ETFs.
I totally agree. I have been watching this, based on a recommendation from a family member, and the initial investment keeps going down since inception.
Bought more today. I have stocks, ETF's and closed end funds for return. No problems. I don't worry if it's going sideways a long time. As long as I'm getting good returns. You seem to think they will never go back up. What do bonds do? Pay you back.... I buy induvial stocks for growth also, not just for dividends.
Mostly agree. I bought qyld as a test intending to use it to help gain a bigger monthly yield quicker, but so far, Ive been holding better stuff I'd rather move it to later when I get the time. Small portfolio losses are small thankfully
I only bought a small amount of QYLD with the mindset that I won't sell it forever and because of its high monthly yield. Also, even if it went down straight to zero then it won't hurt so bad.
Thank you! I never quite understood the covered call ETFs, or covered calls for that matter but still felt leary about investing in any them. But, your clear explanation why these are not the best investments made so much sense. Thank you again! I learn something valuable from you every, single time I watch one of your videos! All the best to you....
I like this analysis. Writing your own slightly out of the money calls is a much better strategy for capital preservation, and the monthly income generated should be similar to that of QYLD.
but the idea of QYLD is, even if the stock price dropped 99.9%, you'll still be getting the same div payout you first put in. So as long as you hold, the div is forever. (unless I'm wrong)
QYLD is for INCOME (NOT GROWTH). At the price I bought QYLD I receive an average distribution of 10.93%. Approximately every 6.59 years I will receive all the money back that I originally invested in QYLD. This will repeat itself approximately every 6.59 years. QYLD holds the NASDAQ 100, QYLD will not go out of business unless the NASDAQ 100 goes out of business. There's a reason why QYLD has net assets of 7.35 billion.
You are absolutely right. It won’t recover. I sold all I had. Yield % is misleading. Absolute $ Amount of distribution has been and will keep decreasing ..can you shed light on DIAX and SPXX?
I personally haven't invested into QYLD yet. I have a Tax Free Savings Account that I can sell Covered Calls in, and mostly hold solid blue chip stocks, but also do diversify a little bit into some higher risk investments. With the tax free income from dividends + covered calls, I could use some of the income to put into stuff like QYLD, JEPI, JEPQ, etc. Only taxes I pay is withholding tax on dividends and distributions. That being said, probably would never hold QYLD, XYLD, and other covered call ETFs in a taxable account as it would probably be pretty tax inefficient.
QYLD is like many ETFs in that it is a short term vehicle. Let’s say you hope QQQ rises but there’s enough uncertainty you don’t want to own QQQ outright, QYLD is one way of lowering your basis while you wait if it drops. With QQQ alone, you have to wait with no change in your basis. It actually seems worse to live off these distributions. And yes, you can always write your own covered calls, but 1) not every person or account is approved for option trading, 2) not everyone wants to take the time to manage that.
If you want a derivatives strategy just do a derivatives strategy. I used to own a covered call etf but that's when volatility was high and maintained at a high level. I'd rather just deploy a short options strategy. When vol is low and jumps big an etf like this will suffer big losses. That's the risk. If you wanted to buy while you have a painted high volatility it might not be a bad idea but I'd just execute the strategy myself by selling put spreads in a small account it preforms better with less capital. It just requires some learning.
I could be wrong but I’m almost positive QYLD has done a 1:2 split in 2015, 2017, 2020, and 2021. So looking at the chart alone could be misleading I don’t know though don’t follow it close enough.
Thanks for the video. For me, the objective of an investment is to get cash flow, and protect my principle. I was invested in NOBL, which is down approx 7% YTD, and currently yields 2%. QYLD is down 18% YTD, and yields 11.6%. A wash? NOBL might recover lost principle, but does not pay a lot in terms of cash flow. I guess the only real 'risk free' investment is treasuries. If one wants to live off of cash flow, a higher yield is important, or you will be selling part of the principle. In theory, as long as appreciation is greater than the sell of principle, then one is OK. So, is one better off over time holding NOBL vs. QYLD? Maybe not in an appreciating market. Maybe in a Flat or declining market? It would be interesting to see this modeled out.
Thanks for the info. Lots to think about. Sooo about that 25% your will to pay. Will you take 100k and meet me in the middle with a .03 expense ratio? 🤔😄
Of course. You’ll get $2,083 per month in amazing dividend income and that will continue for the next 4 years until the fund runs dry! I’ll even wave the .03
Hello, thanks for the info lam new investor and l have 50 shares of Qyld and xyld I am using it the dividends to buy other stocks what your opinion should l keep doing that or should l stop?
If the underlying goes up and you have to sell to cover the call, dont they have to buy now at higher prices because their mandate is to hold those particular securities?
@@BradFinn here is an extreme example. Cc Etf has to hold a stock A at 100% at all times. On March1, Stock A price is 100 and a fund manager writes a 1-month call with a strike of 100 and sells it for 3 of premium. By the end of March, the price of A is 105, a written 1 month call for A is in the money (+2 for buyer) and exercised in March. The fund manager is either settling for cash with payoff of -2 or if he sells the stock to cover the call, now he has to buy the same stock at 105 with the same total payoff of -2. If there were no mandate to hold stock A, he could just sell it to cover the call and make 3 premium, but with the mandate to hold A, he has to buy the stock at whatever the price is, 105 in our example, but could be higher in fast rallies. Is my example clear?
I think if you want a covered call fund XYLG/QYLG, JEPI/JEPQ, BSTZ/BST, DIVO are better than a 100% covered call fund. Although what would be good as a fund is if a company came out with a fund tracking BXMD the CBOE S&P 500 30-Delta BuyWrite Index which would have a little growth since it follows 30 delta spy options but the closest thing to that is XYLG/QYLG 50% CC
@@BradFinn I mostly use the hybrid funds to smooth volatility with a little monthly income while still offering a little growth for half my portfolio. The other half of my portfolio I sell options for more active and aggressive gains/risk on growth stocks or ETFs that have potential to fill marketcap in a sector. But there's literally thousands of different ideas on building out a portfolio lol
Covered call ETFs are better compared to annuities. There, you turn over all of your capital to an insurance company and they'll pay you monthly at a 3-5% annualized rate. But there is no residual value. It is a very conservative decumulation strategy that solves longevity risk. Covered call ETFs are like annuities only your payout is much better and you have some residual value for heirs potentially. Annuities and covered call ETFs seem appropriate for people who do not need to leave a legacy.
Correct me if I’m wrong but isn’t QYLD a place to park your money when you expect a downturn in the market. The ETF has gone up $1 a share over the last month or so. When you hold this ETF in a TFSA which all income is completely tax free upon withdrawal is great for retirement income.
In a bear or sideways trading market it makes sense in a concept way other than that it would be better to actually just sell covered calls on the stocks themselves so the point of it just doesn't work for me
I do both QYLD and covered calls, I use M1 to dollar cost avg to build an easy income while using Robinhood for covered calls on dividend stocks for compounding growth
Good explanation, you forgot to mention covered calls pay 2-6% per month, qyld is only 1%. But the qqq they hold can go up in price and some months it can hit close enough to be profitable.
As a holder for a about year and a half of qyld it's definitely not what it pays out to be. Now I am learning to sell covered calls because qyld is down 18% And now watching your video I am learning about distribution yeld vs dividend yeld
@@BradFinn starting within my tsfa so csp aren't available in this kind of account. Still learning and finding out whats possible other than just covered.calls
Don't know how heavy your in but you can sell calls on your qyld its self . That's how I got out of it, I had to buy back in when it was 17 lowered its cost base to around 19 sold calls and collected divided tell I came out ahead .
But isn’t it better to buy it when is low and when it goes to it’s average top and stays there wouldn’t that mean you made profit plus you get the dividends from it.
So if they sell at the money calls in a bear market, I can understand the uninterrupted premium collection. But you said they’re selling on 100% of the portfolio. When the market trend reverses and they sell at the money call with 100% of the portfolio, there’s no money to roll the calls so they’ll lose possession of the stocks. Where will they get the premium for the next distribution from? The math aint mathing
@@BradFinn So I just saw a video where a fella did the sane as you, but he said the stocks don’t get called away but there’s a cash settlement in difference between premium received initially and current premium value. So I get now, stocks are not taken away but cash has to be paid. Whichever way, the capital is draining and even if one’s focus is just cashflow, there can’t be cashflow without capital 🤷🏿♂️
Absolutely agree with you. I owned some last year when I was clueless about options. Here’s something else I also learned when I finally sold the fund, about the “return of capital” taxation that they falsely advertise. It was NOT treated as ROC. It was ordinary income. AverageJoe had a video on how he discovered this by having to call them.. I loved your example of taking someone’s 10k and paying it back over several years by depreciating the principal😁 really put it in perspective
Qyld or cc etf are for people who already have a large net worth and are retired. Or those who want to supplement income and don't want to sell shares.
Pretty sure if you read their fine print they use European style options, so they cannot buy it back and they cannot be exercised early. It only expires in the money or out.
they can absolutely buy it back... the european style just means it is cash settled, aka there's no shares meaning no exercise risk. QYLD sells calls on NDX, which is the nasdaq index. They just dont buy it back, and instead use the premium from the calls to pay out the distributions and their expense fees, and if there's any left it goes back into the fund. The "problem" in regards to its share price is QYLD fully participates in the markets down side, while capping its participation in the upside, so at best if the nasdaq trades sideways for an extended period of time QYLD wont lose value, but in an extended bull market like we saw before this year it won't even come close to the same appreciation amounts as QQQ, even factoring in the dividends
@@BradFinn no reason why it can't go up then in a bull market. Not sure why the point of the video seems to suggest that it can't gain it's losses back.
@@BradFinn You've mentioned that Growth is important. These supposedly have "growth" worked in. In their name. the yield is less. Would you think that these would be able to recover back since they use only 80% of their holdings?
I don’t think it will ever recover. I do think it will find an NAV that is sustainable, as they pay a max of 1% of the NAV each month. If NDX call option premiums maintain value, then the fund will be more supported, as the shareholders don’t get 100% of the premium that they collect each month. I am not invested in QYLD, because I’m unsure what the NAV will need to be before it can maintain support. Time will tell.
The fund depreciates over time, but if u net a profit on dividends, and invest that profit into quality stocks or etfs, I don’t think it’s a bad idea, but you have to have the stomach to see your initial investment tank. It’s risky but I think it will work.
@@BradFinn I'm not planning on doing that, but if I was going to use the fund that's the only way I could ever imagine using it, I'd definitely would not use it like a preferred ETF, which is what it is probably used for, if someone had not saved/generated enough money over their life. I do have a serious question I'd like your opinion on, which is, what do u think the longevity/life of QYLD is? Do u think it will still be around in 5, 10 years ?
If QYLD is held in a Roth IRA or HSA and all “dividends” are reinvested… are there any tax implications? I believe it’s taxed as ordinary income if it’s in a regular brokerage account. Although is that still the case if all “dividends” are reinvested?
It is to good to be true, that's it. I wish there was an ETF who would invest in all the BDC's and mREITS. That would also be high yield, a more stable course and high yield.
Entertaining to those who already understand; unenlightening to those who don't. There's a difference between can't and won't. All niche ETFs are short term timing plays. Getting in at the bottom in a sideways market can be profitable.
Not a fan of QYLD either. Yield chasing for sure. For covered call etfs I like DIVO better (better approach), you still get appreciation, dividends & covered calls. If you need, high yield I'd prefer actual real estate or lofty or selling options if you don't mind a more active approach.
Also, in your opinion what’s a medium ETF that provides growth and decent dividend? I’ve been looking at VIGI but again I’ll default to your opinion. I’m still learning
I understand people are saying it is not growing and it is losing money, that is not always true if you bought a month ago you would be up 1.50 a share and collecting a huge dividend payment. This fund does great when the market is just trading flat or up some and then down some basically going neither up nor down much. You probably would do better to have a well-diversified account with dividends around 5 percent and that way you collect some money and get the growth as well just my thoughts.
I'm getting really scared on all my Global X covered call funds, I'm beating their performance doing the wheel on all of my holdings except T and VZ. Help, me understand why QQQ was up 2.8 percent today and QYLD didn't move at all. I'm in the hole about 7% total if I add in my dividends and 13% on share prices on this etf and wondering if it will make a come back? I love your videos, would like your opinion the best way to move on from QYLD.
Look man I agree with you and only hold a very small position in QYLD. But, you absolutely need to factor in total return on any covered call ETF. YES, QYLD is a depreciating asset overtime but the distribution it pays money needs to be factored in.
I don't have enough money to sell "CALL" option so I bought COVERED CALL ETF. I know i can do my own. Selling "CALL" but to do that u need minimum 100 shares. FANNG shares minimum price is least $100. To just sell CALL for FAANG. U need least $100,000.
Here’s the thing being a new investor that confuses me I agree with everything you say but let’s look at your example I give you 10000$ you give me 15% every year and charge me 0.6% will it’s been around since 2013 so almost 10 years you would have paid me 150% of my capital back but now I’d still have those shares so 15% until you sell but not to mention almost every December they have had a special distribution sometimes really high. I don’t own qyld but I can see why people do get it.
QYLD has already been beaten to death. Let me simplify. If you are 0 -55 or in growth mode still working and building your portfolio, you should not own QYLD. If you are retired and seeking monthly income, QYLD as a portion of your total dividend portfolio can be a good choice but let me clarify a portion. I've read a few crazy stories of some retirees investing their entire nest egg into QYLD and that's a diversification no-no. A mix of QYLD, RYLD, XYLD, JEPI, DVO, SCHD and VYM can help spin off living income for retirees. Keep in mind not to long ago retirees seeking monthly income would buy an immediate annuity of say $100k or more which is gone to the annuity insurance holder and what you basically got paid was your capital with a 3% - 5% interest rate. Your initial $100k annuity capital was gone to the holder forever. Just as an example say you did invest that same $100k in QYLD and lost 18%. Unlike the annuity you'd still have $82k and you're still collecting 1% per month in income.
*Do you agree or disagree?? Tell me why*
Brad I agree 100% these ETFS are the definition of a yield trap value goes down your own money is given back to you and ordinary taxes... once all your money is given back then 100% of they money you get is ordinary dividends. I have some BDCs like GLAD and GAIN but I take those dividends and buy Qualified dividend stocks with them because of taxes.
I agree, I call them Pac-Man it slowly eats away your investment.
Just one question, why invest in anything when you can make 3-6% per month in covered calls? Shouldn’t you just keep growing the cash?
Sounds like you have a new business to run Brad. 😀
Agree 100%
Im a net seller of options, collecting 2 to 4% a month from quality companies.. google being one of them. Learned the wheel from brad, hes a legend 🙌
I appreciate the kind words bud. Glad you’re killing it
I can’t wait to use google for covered calls and puts. Still learning the wheel. But I want to keep it as simple as possible. ATM CCs or CSPuts
2% to 4% is super sustainable....not.
24% to 48% each year..he must he the best investor or all time
@@thatquantguy he’s taking way too much risk with his strikes. Watch him take a 500 percent loss a couple times.
Agreed! QYLD eats itself. I found this out a few months after buying 1k shares for around $22 each. The stock market then tanked after said purchase (of course). Now, it looks like the most QYLD could possibly rebound, based on the downward-sloping trend line is near $19 per share equating to a $3k loss at best. A tough lesson to learn! This video will help others. Much appreciated, Brad!
Cheers C Knight.. we have all been there! For gosh sake, I own PTON at $25!
I own 3900 shares of Qyld at $21.11 it's a long play for me along with others I am getting $2800 to $3500 its for income along with my other shares I am 53 and retired.
All my wife and my stocks are in our 457 plans .
3900 shares paying say .18 cents return 702 a month for yearly return of $8424 a year which in 1.5 years made up for the loss but with that said its for income and we are enjoying life with our house paid off it's been a blessing and that income been fantastic.
You didn't actually lose $3k. You got paid the whole time u held. Instead of getting paid thru selling your capital appreciation you got paid income. So the actually loss is a lot less.
If you buy QYLD hoping for share price appreciation you are a fool.
Capital growth is literally the complete opposite of the intention of the fund 🤦♂️😂
QYLD is strictly an income / retirement play
@@FA9082 Yup. Dividends are great but not at the expense of capital.
To be fair, QYLD when you include the payouts and share price (total return), made 15.7% in the last 3 years. That's 5% avg return yearly
Awesome
I’m glad I watched this before investing in this ETF. I think waiting for the full premium every month is foolish, especially if you’re able to walk away with 75% of the premium mid way through.
I would have to agree with you
@@BradFinn Agree with what? Does he mean he's closing a profitable option before expiration?
I went into this video thinking it wouldn’t change my mind and id still love my 449 shares if qyld and RYLD … but now I am concerned
Haha. It wasn’t intended to change your mind John. Just your perspective :)
This is the first video I've seen about QYLD that gets it right. People expect QYLD to provide steady income like a dividend-paying stock. With a dividend-paying stock, if the price drops, the dividend stays constant (as long as the dividend is based on profit and not selling shares, going into debt, etc.), and the yield rises. With QYLD, it won't behave the same way, as the price goes down, the yield stays constant (and hence you lose income).
Thanks for the comment. I would have to agree with you
Personally, I disagree with some of your points in this video. The equivalent ETFs that do not do covered calls do have a total value higher than their covered call equivalents over time for some of the reasons explained in the video (taxes / higher management expenses).
I don't think your analysis is comparing apples to apples. Total growth, stock appreciation + distributions, is what you aim to get for your portfolio. The total between the two is the factor you are seeking for not either appreciating stock price or dividends only.
Typically the strategy for growing a covered call portfolio is reinvesting the dividends to add more total stocks, either through a drip or by manually reinvesting dividends. If you add more owned stocks to your portfolio from your dividends, the total value of your holding goes up. That would be a more accurate measurement of total growth.
By reinvesting the dividends, QYLD has a yearly total growth of around 8.17% as of Aug 6 2022. $10,000 would turn into around $19,497. I could have done a better job of going through all the dividends to more accurately do this, so feel free to roast me in the comments.
With reinvesting the dividends in QQQ you do get a higher total growth with lower taxes. Total growth with QQQ is around 9.29%, and your $10,000 investment invested at the same inception point as QYLD started would turn into 21,285. Again, I could have done a better job going through all the dividends more accurately.
Basically, QQQ gets a higher total gain over time and has better tax benefits. QYLD has lower total gain and tax benefits, but the mechanism for getting cashflow is simpler. There might be slight downside protection for flat and down markets, but I wouldn't know how to qualify it with real-world results.
I would also challenge you to look at other covered call ETF's to say all are "depreciating assets". RYLD and XYLD are covered call ETF's with mostly flat stock prices. Both of these have had a small appreciated stock price since their inception. The expectation for these ETF's should be flat or slight losses or gains.
I do invest in covered call ETFs as I have some different goals than using investments as a store of value to make larger purchases or for retirement. As well I am Canadian, and there are different taxation rules for dividends and different regulations for tax-preferred accounts.
In Canada, there are 3 tax types for dividends, qualified dividends (100% income taxed), capital gains (50% of income taxed), and Return on Capital (0% income taxed). Return on capital is literally returning capital or tax loss harvesting losses on capital gains. Certain ETFs and split corporations that I invest in state how each dividend is taxed every year. Specifically, the split corporations I own tend to have 75% of returns as return on capital and 25% dividend income, a tax rate of 25% of income. SBC from Brompton is an example of split corp that does this. I would also say that covered call ETFs tend to have better tax advantages than dividend stocks because the different types of tax rates for dividends.
The Canadian tax-favored accounts, also have some different rules. The TFSA, the Canadian equivalent of the Roth IRA, and the RRSP, the Canadian equivalent of the Traditional 401k, don't have age restrictions for withdrawals. Shorter-term strategies can be used with these accounts, instead of waiting until you are 59.5 years old. As well, the RRSP can be contributed with after-tax money outside your income. I use my dividends from my after-tax account, to contribute to my RRSP, and the dividends help reduce my total tax burden better than holding growth stocks.
Also, I have a goal of using my dividends to live abroad temporarily in the next 3-5 years. Aiming for monthly dividend returns, instead of capital growth is easier to plan for this venture. If I had a large purchase like a house, I was planning for, I would use growth stocks or ETF's so I could more accurately hit that target. I'd also be lying if liquidating a few shares of my portfolio to live off of makes me nervous. I know logically the 4% rule for stock portfolios is a safe way to use growth stocks to live off, but it would make me nervous, especially going into a down market.
Just some food for thought, and everyone out there is trying to do what is personally best for their situation. I appreciate your videos and have watched a few in the past. I just had to comment on this one, because I don't think your analysis makes sense.
Thanks for the feedback
@@BradFinn It was hard to separate out QYLD functionality from your rant about it as evidenced by such replies. Comparing something that someone doesn't understand (QYLD) to something else they don't understand (covered calls) doesn't do much to help their understanding.
Thanks for this comment
you are one sharp cat , you now have a new subscriber
Cheers
Alright, you've convinced me, I'm selling my 400k in QYLD and putting it all in USOI.
Thanks for the great advice. 😀
Haha. Didn’t want to convince anyone of anything. Just give a new perspective :)
Good luck man!
USOI? I hope you're joking. Although, I must admit USOI high yield is attractive, the cyclical nature of a ETF tied to oil makes it high risk. I have QYLD and USOI in my portfolio, but only a percentage. I use the income from them to buy traditional dividend stocks and pay down my margin account. Between the two they generate about $250 per month...
Bro, we buy QYLD not for growth but for MONTHLY INCOME. And QYLD delivers that every single month baby.
I can’t tell if you’re joking or not. I spoke on this very point. 🤣 thanks for the evening chuck!
This makes a lot sense. I have 156 shares of QYLD at over 21.00 average per share. I receive about 26 a month in distribution. I'm down approximately 10 percent in value. After watching this, I'm considering selling a call on my shares and buying a leaps on something else to sell covered calls on. I'm guessing I would average more than 26 a month with this strategy instead if I can find a quality stock to do it with. Thanks for your sharing your thoughts on QYLD.
Good luck Carolyn
Hahaha I love your intensity to your reason. It’s so genuine. That’s how i feel trying to explain things to family members who know nothing about investing and are stuck in the Stone Age of “save money in the bank and work hard”😂😂 makes my blood boil cause they refuse to understand what I have learned.
I appreciate the kind words
Omg man! I've heard so many hype QYLD lately? What's up with that?? The numbers don't lie!!! Thanks!
PS. So glad the podcast is back! I missed it!
Right on Charles.. im glad its back too..
there will always be hype.. Fish like easy shinny objects that look like a gift.... the sharks patiently wait for them to come out of hiding before having a nice meal!
I ran a back test on qyld and if you put 10k when it launched and reinvested the distributions, it would be worth 17k today. Not great for growth but isn't correct saying it is just return of capital.
Cool
What would it be worth if if you didn't reinvest the distributions? At some point it would be nice to be able to receive the distributions as income without reducing the portfolio.
Good points on distribution yield and the covered call aspect but I do believe it will recover to the trend down up near 20. I think it's an easy rebound play from bottom to a return to trend plus the divy pay out. It's not going to return to highs nor will it ever with its structure but it's going to bounce off bottom just like it did after March of 2020. It does work for growth if you have a large enough share count. Also getting paid 12% a year while it's down 20% on the underlying. With s&p or qqq you're down 20% period.
Thanks for the comment
You have explained this concept better than any other UA-camr so far and I've watched at least a dozen UA-cam videos of UA-camrs not liking you yld for this reason but you bust it down and explain it the best out of anyone I've seen yet. Good content
I appreciate it.. thank you!
Brad, I totally get all of your points. One thing I see many people do in their analysis is not include dividend/distribution reinvestment in the return. (I'm not saying that you are doing that.) A chart showing QYLD vs QQQ doesn't tell us the bottom line of QYLD + reinvestment vs. QQQ. Personally, I'm thinking of buying some RYLD right now with full reinvestment. Possibly, the Russell is better than the Nasdaq for this strategy? I'm learning options but I'm not ready yet to find all my own stocks and write my own covered calls.
Thanks for taking the time to leave a comment
The best ETF advise has been from you. You should do ETF vids and dissect them 👍🏽
I appreciate the kind words. They are out there.
This is a really useful and informative video. Thanks for the honest opinion! Do you view something like JEPI differently? Share price up 13% since debut in 2020, and slightly lower expense ratio than QYLD. I'd be interested to know if JPMorgan Chase manages a covered call ETF better than Global X does.
As I mentioned in the video, not really looking for something compreable. I’ll just do the calls myself and not worry about how they operate their fund. I’ve never looked into JEPI
I own QYLD in a retirement account and disagree with you that its stock price will not increase over time. As of the close on 8/5/22, QYLD has increased to $18.47 from its closing low of $17.13 on 6/16/22, increase of about 7.25% while still paying the approximate 10% distribution.
During the previous bear cycle, QYLD increased from is closing low of $17.99 on 3/16/20 to the start of the current bear cycle in QQQ that began on about 1/4/22 to $22.22 or about 19% while paying the distribution.
When the current uptrend in QYLD eventually ends as evidenced by a series of lower highs and lower lows on a daily chart, I will consider selling my position in anticpation of buying back when a an uptrend resumes. However, even if an investor does not sell in a downtrend, they may still do ok by reinvesting the distributions during bear phases by essentially buying additional shares at lower prices.
Brad, I appreciate your videos and even this one has started my thinking that maybe QYLG would be a better alternative in order to capture more upside in uptrending markets along with about 50% of the distribution.
Thanks.
Cheers. Thanks for the comment
The mistake Brad is making is he's thinking of QYLD as an equity instrument but it actually makes more sense to view it as a quasi fixed income
What fixed income instruments do you know will pay you 10%+ pa with guarantee you will get paid every month
@@FA9082 his other argument is tax consideration. If you invest it in your IRA, what tax is he talking about?
Wow, really impressed with this video. First time I've seen anything from you. Thanks for the insight, and looking forward to learning more from you.
Thank you so much for watching and taking the time to leave a comment
Damnit Brad! Why you gotta make so much sense!! Ugggh I was finally feelin like I was getting somewhere!! Lol good video I gotta reevaluate...my whole life now! Good day SIR!
haha.. just trying to add alternative perspectives..
QYLD is not for growth. If you have a lot of money and are looking for income, I think it has a role to play in a portfolio. Just understand you are not going to get the appreciation you would in regular stock funds/ETFs. I do agree with you on not following a get rich quick approach. I have become well off by saving a lot for 30 years and automatically dollar cost averaging every month for those 30 years. That has allowed me to play with something like QYLD, but I sure don't threaten my portfolio or my financial security by being in it due to scale and percentage allocated.
So what ur saying is that if you have a lot of money, you don’t have a problem giving it to me and letting me give it back to you slowing and just call it a “dividend”. Makes sense
@@BradFinn Lets say I invest $100k in QYLD and get a 10% distribution and the market and QYLD price is flat for that year and I then sell. I made 10% return on my principal. Let's say I was in another stock or ETF that did nothing (as the market is flat or down, either one) and paid minimal dividend in the same timeframe. QYLD investor comes out ahead.
QYLD, RYLD, XYLD, JEPI, MAIN, DLN, DIV...sell a put with the highest premium, collect the premium, then use it to purchase shares, then dca while collecting my monthly dividends. That's my strategy. $300 monthly dividends isn't bad between all of them. Buy and hold forever with future appreciation hopefully. Win, win! Put and call credit spreads are part of the strategy also.
Good luck L L
Coukd you explain a bit more?
@@adriana-jn8ru what specifically do you want to know? Selling puts or DCA?
I dumped my entire YLD's back when it was $20 (with a cost basis of $22 so on a loss) and never looked back.
I'm doing my own premium selling and it's SO MUCH better
Awesome!! Same!
@Brad Finn I am coming back to this post to say you were right! I couldn’t find my original post, but after digging and really understanding this you are absolutely correct on this video thanks for the content and keep up the great work
Cheers
Thx for the video! Is JEPI any different than QYLD from strategy perspective? The declining value of QYLD doesn’t look good to me, wonder if JEPI is the same nature?
Its up for debate
Awesome vid I been debating about QYLD, your last vid about his beginner socks for the wheel was 7 months ago I believe are those still viable or have things change due to the bear market? I want to get into it and want to start buying a few here and there till I have 100.
Criteria is still the same.
This one is 3 months old
ua-cam.com/video/4-lCwJV755w/v-deo.html
Great explanation. Love your enthusiasm. Have made more money with the wheel strategy that I learned from you. Holding my qyld for now. Selling on up days to lessen the pain of the loss
Good luck bud. Thanks for the kind words!
Exactly, roc is a suckers game. A true dividend stock where I sleep at night is Enbridge and Pembina Pipeline.
👍🏻
I did own this, I was in at 21.60 owned 200 shares was selling monthly calls on it to pay that exp.rate, I bought back in when it was in the low 17.00 range lowered its cost base to into the 19s then sold calls on all the shares tell I beat my loss on it with divided , actually just sold all the shares last week . I made money on it but not like I expected too . Wasn't expecting tech to take such a hit and qyld sells its calls on tech . Was why I thought it would do good. Nope unfortunately I had bad timing..
Thats why im a long term investor.. the longer out you look the less these short term pull back matter.. its all a matter of perspective
Disagree. This fund is not for making Capital gains (agree on that), It's for producing income over time. You will not get wealthy investing in this fund, but if you already have wealth and have a dividend investing strategy, it is a cash machine that out runs the Capital side over time. Do the math, it all works. There are a ton of assumptions in this video, most don't fire off of data, and strategy only "I don't know" and you should trade options instead. I do both QYLD and trade Options, both are viable if you have the right strategy and mindset. QYLD price does recover during Bull runs, it does not keep up with the Qs, but the Qs don't pay my expenses each month and both Options and QYLD have the same tax implications,. One key is you have to buy QYLD at it's lows, I agree, if you bought at the highs, principle reduction is a problem, but again, it's an income not get rich strategy. So, you can't look at this as black and white, good or bad, it's much more complicated than that.
Nice. Thank you for sharing your opinion. Good luck
Well after making my other comment on here 2 days ago, I don't think I'm going to touch any of the YLD funds in any account, tax-free or not... Would rather just keep selling covered calls on individual stocks I hold and have more control over choosing where to set my strike price and ensuring my strike prices are always above my cost basis. I'll just use the premium and dividend income to buy into more stocks or ETFs that may be a better alternative to the YLD funds.. JEPI and JEPQ, SCHD, possibly SCHG are still on my radar but not fully decided whether or not I want to throw money into any of those funds either, or just throw my dividend and covered call premiums into individual stocks and non-covered call ETFs.
Right on
I totally agree. I have been watching this, based on a recommendation from a family member, and the initial investment keeps going down since inception.
Yes it has
I agree and I will start getting out but can you do a video on what stocks you r using for covered calls. Thanks
they change all the time. I rotate between 20 or so. Check out any of my recent wheel videos for the criteria I use or jump in the discord
Bought more today. I have stocks, ETF's and closed end funds for return. No problems. I don't worry if it's going sideways a long time. As long as I'm getting good returns. You seem to think they will never go back up. What do bonds do? Pay you back.... I buy induvial stocks for growth also, not just for dividends.
Cool man. Best wishes
Did not know it wasn’t a true dividend! Good call out. Going to table this stock until I’m actually ready to retire. Do you like reits? Stag/Reality
Yup. Check out my dividend video from last week
Mostly agree. I bought qyld as a test intending to use it to help gain a bigger monthly yield quicker, but so far, Ive been holding better stuff I'd rather move it to later when I get the time. Small portfolio losses are small thankfully
Right on. Thanks for the feedback
I only bought a small amount of QYLD with the mindset that I won't sell it forever and because of its high monthly yield. Also, even if it went down straight to zero then it won't hurt so bad.
good luck
Thank you! I never quite understood the covered call ETFs, or covered calls for that matter but still felt leary about investing in any them. But, your clear explanation why these are not the best investments made so much sense. Thank you again! I learn something valuable from you every, single time I watch one of your videos! All the best to you....
I appreciate the kind words. Good luck with your investments.
Thank you for your honest opinion !! Love your passionate honesty !!
Cheers
I like this analysis. Writing your own slightly out of the money calls is a much better strategy for capital preservation, and the monthly income generated should be similar to that of QYLD.
👍🏻
Hello Brad, what are your thoughts on Credit Suisse Covered Calls ETNs like USOI, SLVO, GLDI? Thank you.
never heard of them
but the idea of QYLD is, even if the stock price dropped 99.9%, you'll still be getting the same div payout you first put in. So as long as you hold, the div is forever. (unless I'm wrong)
you are incorrect Sir
....but, but, but why would you buy an Ovation guitar? Thanks for the video..very eyeopening on QYLD.
It was a gift
QYLD is for INCOME (NOT GROWTH). At the price I bought QYLD I receive an average distribution of 10.93%. Approximately every 6.59 years I will receive all the money back that I originally invested in QYLD. This will repeat itself approximately every 6.59 years. QYLD holds the NASDAQ 100, QYLD will not go out of business unless the NASDAQ 100 goes out of business. There's a reason why QYLD has net assets of 7.35 billion.
COOL!! I KNEW YOU WOULD SAY THAT! WHICH IS WHY I MOCKED YOU IN THE VIDEO BEFORE HAND. CAN WE STOP YELLING NOW!
There's a difference between emphasizing three words and yelling.
You read what I wrote, stick to the subject on hand, and give me your answer.
You’re right , but do you have anything comparable . We can listed to problem all-day. But what is your solution
Watch the video again Glossy Nails. I gave a few suggestions
Good info. Does your line of thinking also apply to RYLD?
I mentioned my thoughts on the comparable ETFs in the video...
@@BradFinn You could have simply said Yes or No and that would have been fewer words.
You are absolutely right. It won’t recover. I sold all I had. Yield % is misleading. Absolute $ Amount of distribution has been and will keep decreasing ..can you shed light on DIAX and SPXX?
good luck.. thanks for the comment
Would be nice to see a debate between Divided Bull and yourself about this.
My position is clear :)
I personally haven't invested into QYLD yet. I have a Tax Free Savings Account that I can sell Covered Calls in, and mostly hold solid blue chip stocks, but also do diversify a little bit into some higher risk investments. With the tax free income from dividends + covered calls, I could use some of the income to put into stuff like QYLD, JEPI, JEPQ, etc. Only taxes I pay is withholding tax on dividends and distributions. That being said, probably would never hold QYLD, XYLD, and other covered call ETFs in a taxable account as it would probably be pretty tax inefficient.
Right on
QYLD is like many ETFs in that it is a short term vehicle. Let’s say you hope QQQ rises but there’s enough uncertainty you don’t want to own QQQ outright, QYLD is one way of lowering your basis while you wait if it drops. With QQQ alone, you have to wait with no change in your basis. It actually seems worse to live off these distributions. And yes, you can always write your own covered calls, but 1) not every person or account is approved for option trading, 2) not everyone wants to take the time to manage that.
"QYLD is like many ETFs in that it is a short term vehicle".. You lost me there
If you want a derivatives strategy just do a derivatives strategy. I used to own a covered call etf but that's when volatility was high and maintained at a high level. I'd rather just deploy a short options strategy. When vol is low and jumps big an etf like this will suffer big losses. That's the risk. If you wanted to buy while you have a painted high volatility it might not be a bad idea but I'd just execute the strategy myself by selling put spreads in a small account it preforms better with less capital. It just requires some learning.
you lost me at derivatives
I could be wrong but I’m almost positive QYLD has done a 1:2 split in 2015, 2017, 2020, and 2021. So looking at the chart alone could be misleading I don’t know though don’t follow it close enough.
cool man.. buy it all
Thanks for the video. For me, the objective of an investment is to get cash flow, and protect my principle. I was invested in NOBL, which is down approx 7% YTD, and currently yields 2%. QYLD is down 18% YTD, and yields 11.6%. A wash? NOBL might recover lost principle, but does not pay a lot in terms of cash flow. I guess the only real 'risk free' investment is treasuries. If one wants to live off of cash flow, a higher yield is important, or you will be selling part of the principle. In theory, as long as appreciation is greater than the sell of principle, then one is OK. So, is one better off over time holding NOBL vs. QYLD? Maybe not in an appreciating market. Maybe in a Flat or declining market? It would be interesting to see this modeled out.
You’re welcome. Thanks for the comment
Key words in your comment 'OVER TIME'.
Thanks for the info. Lots to think about. Sooo about that 25% your will to pay. Will you take 100k and meet me in the middle with a .03 expense ratio? 🤔😄
Of course. You’ll get $2,083 per month in amazing dividend income and that will continue for the next 4 years until the fund runs dry! I’ll even wave the .03
Hello, thanks for the info lam new investor and l have 50 shares of Qyld and xyld I am using it the dividends to buy other stocks what your opinion should l keep doing that or should l stop?
I am not a financial advisor.. personal finance is personal
If the underlying goes up and you have to sell to cover the call, dont they have to buy now at higher prices because their mandate is to hold those particular securities?
Im apologize, I dont follow
@@BradFinn here is an extreme example. Cc Etf has to hold a stock A at 100% at all times. On March1, Stock A price is 100 and a fund manager writes a 1-month call with a strike of 100 and sells it for 3 of premium. By the end of March, the price of A is 105, a written 1 month call for A is in the money (+2 for buyer) and exercised in March. The fund manager is either settling for cash with payoff of -2 or if he sells the stock to cover the call, now he has to buy the same stock at 105 with the same total payoff of -2. If there were no mandate to hold stock A, he could just sell it to cover the call and make 3 premium, but with the mandate to hold A, he has to buy the stock at whatever the price is, 105 in our example, but could be higher in fast rallies. Is my example clear?
I think if you want a covered call fund XYLG/QYLG, JEPI/JEPQ, BSTZ/BST, DIVO are better than a 100% covered call fund. Although what would be good as a fund is if a company came out with a fund tracking BXMD the CBOE S&P 500 30-Delta BuyWrite Index which would have a little growth since it follows 30 delta spy options but the closest thing to that is XYLG/QYLG 50% CC
I dont want one
@@BradFinn I mostly use the hybrid funds to smooth volatility with a little monthly income while still offering a little growth for half my portfolio. The other half of my portfolio I sell options for more active and aggressive gains/risk on growth stocks or ETFs that have potential to fill marketcap in a sector. But there's literally thousands of different ideas on building out a portfolio lol
Covered call ETFs are better compared to annuities. There, you turn over all of your capital to an insurance company and they'll pay you monthly at a 3-5% annualized rate. But there is no residual value. It is a very conservative decumulation strategy that solves longevity risk. Covered call ETFs are like annuities only your payout is much better and you have some residual value for heirs potentially. Annuities and covered call ETFs seem appropriate for people who do not need to leave a legacy.
If there’s anything I care about less than QYLD it’s annuities.
your a gen Xer like myself, should I sell it all tommorow, or just reinvest 1/2 the dividends and not do it again?
I’m not gen z
Nice video Brad. Maybe decaf next time. Killing' it.
🤔
Correct me if I’m wrong but isn’t QYLD a place to park your money when you expect a downturn in the market. The ETF has gone up $1 a share over the last month or so. When you hold this ETF in a TFSA which all income is completely tax free upon withdrawal is great for retirement income.
You are welcome to invest with whateve strategy you see fit. This video just gives my opinion on the etf.
In a bear or sideways trading market it makes sense in a concept way other than that it would be better to actually just sell covered calls on the stocks themselves so the point of it just doesn't work for me
👍🏻
I do both QYLD and covered calls, I use M1 to dollar cost avg to build an easy income while using Robinhood for covered calls on dividend stocks for compounding growth
Nice
Good explanation, you forgot to mention covered calls pay 2-6% per month, qyld is only 1%. But the qqq they hold can go up in price and some months it can hit close enough to be profitable.
Didn’t forget anything George. You forgot to watch the entire video for all the information
As a holder for a about year and a half of qyld it's definitely not what it pays out to be. Now I am learning to sell covered calls because qyld is down 18%
And now watching your video I am learning about distribution yeld vs dividend yeld
Good luck bud. You will make make way more with the wheel
@@BradFinn starting within my tsfa so csp aren't available in this kind of account. Still learning and finding out whats possible other than just covered.calls
Don't know how heavy your in but you can sell calls on your qyld its self . That's how I got out of it, I had to buy back in when it was 17 lowered its cost base to around 19 sold calls and collected divided tell I came out ahead .
@@chadinnocenti4906 how far out we're the calls 30 days? The option chain is very slim think my cost is close to 20 with like 900 shares 😅
@@Yusuf.A90 Yes they are monthly calls . It took me a min or 2 lol
great video as always brad thank you!
My pleasure!
But isn’t it better to buy it when is low and when it goes to it’s average top and stays there wouldn’t that mean you made profit plus you get the dividends from it.
sure
Agree 100% I'll stick to wheeling my trusty blue chips.
That a boy!
So if they sell at the money calls in a bear market, I can understand the uninterrupted premium collection. But you said they’re selling on 100% of the portfolio. When the market trend reverses and they sell at the money call with 100% of the portfolio, there’s no money to roll the calls so they’ll lose possession of the stocks. Where will they get the premium for the next distribution from? The math aint mathing
No it is not
@@BradFinn So I just saw a video where a fella did the sane as you, but he said the stocks don’t get called away but there’s a cash settlement in difference between premium received initially and current premium value. So I get now, stocks are not taken away but cash has to be paid. Whichever way, the capital is draining and even if one’s focus is just cashflow, there can’t be cashflow without capital 🤷🏿♂️
I would like to here your opinion about IEP stock as a dividend stock I liked hearing you opinion of QYLD
I have never heard of it
Absolutely agree with you. I owned some last year when I was clueless about options. Here’s something else I also learned when I finally sold the fund, about the “return of capital” taxation that they falsely advertise. It was NOT treated as ROC. It was ordinary income. AverageJoe had a video on how he discovered this by having to call them.. I loved your example of taking someone’s 10k and paying it back over several years by depreciating the principal😁 really put it in perspective
Thats the way I see it.. just being paid back slowly until it eventually reaches $0
Interest from your bank is not return of capital. It's still good return.
It can comprise 3 parts: 1) dividend,; 2) ROC; 3) capital gain. ROC is not taxable.
Is there any ETF that does the covered call but with puts too? or any fund doing covered puts?
Not sure
Qyld or cc etf are for people who already have a large net worth and are retired. Or those who want to supplement income and don't want to sell shares.
cool
@@BradFinn sip sipping that Kool-aid on the beach ⛱️ 😎 👌
Pretty sure if you read their fine print they use European style options, so they cannot buy it back and they cannot be exercised early. It only expires in the money or out.
Yup.. ive read it.. doesnt make any sense to me
they can absolutely buy it back... the european style just means it is cash settled, aka there's no shares meaning no exercise risk. QYLD sells calls on NDX, which is the nasdaq index.
They just dont buy it back, and instead use the premium from the calls to pay out the distributions and their expense fees, and if there's any left it goes back into the fund.
The "problem" in regards to its share price is QYLD fully participates in the markets down side, while capping its participation in the upside, so at best if the nasdaq trades sideways for an extended period of time QYLD wont lose value, but in an extended bull market like we saw before this year it won't even come close to the same appreciation amounts as QQQ, even factoring in the dividends
How is the value of the ETF determined? Does the market dictate the price or is it set by the funds value of the stocks it holds?
Same as anything in the market. Supply and demand
@@BradFinn no reason why it can't go up then in a bull market. Not sure why the point of the video seems to suggest that it can't gain it's losses back.
@@BradFinn Wrong. The value of an ETF is the NAV. You should not be talking about things you don't understand.
Does this same stream of thought carry over to the XYLG and QYLG ETFs?
Never heard of em
@@BradFinn You've mentioned that Growth is important. These supposedly have "growth" worked in. In their name. the yield is less. Would you think that these would be able to recover back since they use only 80% of their holdings?
Spot on and the hard truth. Don’t agree then buy shares and test the plan like I did.
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If you look at QYLD as a life time annuity, you will be fine. Buy it , forget it.
You lost me at annuity.
You lost me at annuity.
I don’t think it will ever recover. I do think it will find an NAV that is sustainable, as they pay a max of 1% of the NAV each month. If NDX call option premiums maintain value, then the fund will be more supported, as the shareholders don’t get 100% of the premium that they collect each month. I am not invested in QYLD, because I’m unsure what the NAV will need to be before it can maintain support. Time will tell.
Right on. Thanks for sharing.
The fund depreciates over time, but if u net a profit on dividends, and invest that profit into quality stocks or etfs, I don’t think it’s a bad idea, but you have to have the stomach to see your initial investment tank. It’s risky but I think it will work.
Best of luck
@@BradFinn I'm not planning on doing that, but if I was going to use the fund that's the only way I could ever imagine using it, I'd definitely would not use it like a preferred ETF, which is what it is probably used for, if someone had not saved/generated enough money over their life. I do have a serious question I'd like your opinion on, which is, what do u think the longevity/life of QYLD is? Do u think it will still be around in 5, 10 years ?
Hey man just want to say thanks for your take on this i got out of qyld at a loss and trading options now doing much better
Music to my ears. Keep it up
If QYLD is held in a Roth IRA or HSA and all “dividends” are reinvested… are there any tax implications?
I believe it’s taxed as ordinary income if it’s in a regular brokerage account. Although is that still the case if all “dividends” are reinvested?
Correct
It is to good to be true, that's it.
I wish there was an ETF who would invest in all the BDC's and mREITS. That would also be high yield, a more stable course and high yield.
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Entertaining to those who already understand; unenlightening to those who don't. There's a difference between can't and won't. All niche ETFs are short term timing plays. Getting in at the bottom in a sideways market can be profitable.
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Agreed it won't recover but if you invest now won't you buy for cheap? I bought some when it went to 17 and some cents
Cheap? Will $18 be cheap when it’s $5?
Not a fan of QYLD either. Yield chasing for sure. For covered call etfs I like DIVO better (better approach), you still get appreciation, dividends & covered calls. If you need, high yield I'd prefer actual real estate or lofty or selling options if you don't mind a more active approach.
We’ll said
Have you taken a look at SVOL? It’s basically new. In your thoughts is it the new QYLD?
Nope. But if it’s the new QYLD I probably feel the same
You’d definitely know better than I would. I believe there’s some structural differences. Take a look when you can, maybe… it’s a good deal…? 🤞🏻 😆
Also, in your opinion what’s a medium ETF that provides growth and decent dividend? I’ve been looking at VIGI but again I’ll default to your opinion. I’m still learning
I understand people are saying it is not growing and it is losing money, that is not always true if you bought a month ago you would be up 1.50 a share and collecting a huge dividend payment. This fund does great when the market is just trading flat or up some and then down some basically going neither up nor down much. You probably would do better to have a well-diversified account with dividends around 5 percent and that way you collect some money and get the growth as well just my thoughts.
Thanks for the perspective and for taking the time to leave a comment
What do you think about mortgage REITs ETFs like MORT?
Never thought to much about them.
I'm getting really scared on all my Global X covered call funds, I'm beating their performance doing the wheel on all of my holdings except T and VZ. Help, me understand why QQQ was up 2.8 percent today and QYLD didn't move at all. I'm in the hole about 7% total if I add in my dividends and 13% on share prices on this etf and wondering if it will make a come back? I love your videos, would like your opinion the best way to move on from QYLD.
As I mentioned in the video, If you are willing to do the work you will always outperform this etf doing the wheel yourself
Look man I agree with you and only hold a very small position in QYLD. But, you absolutely need to factor in total return on any covered call ETF. YES, QYLD is a depreciating asset overtime but the distribution it pays money needs to be factored in.
If you say so
I don't have enough money to sell "CALL" option so I bought COVERED CALL ETF. I know i can do my own. Selling "CALL" but to do that u need minimum 100 shares. FANNG shares minimum price is least $100. To just sell CALL for FAANG. U need least $100,000.
Good idea. Take the easy way out. Def better to invest in something shitty as opposed to saving up the money or starting small
If all they’re doing is selling At The Money contracts, then we have a problem
Correct. That’s what the video is about
Great Video, I was excited about QYLD, until I ran the numbers and read the fine print.
Same
Decent holding but mostly agree
It can be good for people using the income to supplement retirement
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Here’s the thing being a new investor that confuses me I agree with everything you say but let’s look at your example I give you 10000$ you give me 15% every year and charge me 0.6% will it’s been around since 2013 so almost 10 years you would have paid me 150% of my capital back but now I’d still have those shares so 15% until you sell but not to mention almost every December they have had a special distribution sometimes really high. I don’t own qyld but I can see why people do get it.
Its still around because people keep dumping their money into it
QYLD has already been beaten to death. Let me simplify. If you are 0 -55 or in growth mode still working and building your portfolio, you should not own QYLD. If you are retired and seeking monthly income, QYLD as a portion of your total dividend portfolio can be a good choice but let me clarify a portion. I've read a few crazy stories of some retirees investing their entire nest egg into QYLD and that's a diversification no-no. A mix of QYLD, RYLD, XYLD, JEPI, DVO, SCHD and VYM can help spin off living income for retirees. Keep in mind not to long ago retirees seeking monthly income would buy an immediate annuity of say $100k or more which is gone to the annuity insurance holder and what you basically got paid was your capital with a 3% - 5% interest rate. Your initial $100k annuity capital was gone to the holder forever. Just as an example say you did invest that same $100k in QYLD and lost 18%. Unlike the annuity you'd still have $82k and you're still collecting 1% per month in income.
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