Investment Strategy: Buying Nasdaq-100 Options and Collecting a Large Amount of Capital Return

The Global X Nasdaq 100® Covered Call & Growth ETF (NASDAQ:QYLG) is a unique investment vehicle launched by Global X ETFs on the Nasdaq exchange on September 18, 2020. This fund, indexed to the Cboe NASDAQ-100 Buy-Write Index (BXN), offers a passive approach to generating income while maintaining exposure to the dynamic Nasdaq-100 Index.

QYLG adopts a covered call strategy, selling 1-month covered calls on the strategy every month and rolling forward the position to the next month before expiration. The fund generally writes covered calls out-of-the-money, providing room for the underlying equities to realize growth before reaching the strike price. This strategy helps to generate a robust monthly distribution rate, currently annualized at $7.13/share, yielding 25.21% on a trailing 12-month basis.

One of the key advantages of QYLG is its relatively low expense ratio of 35 bps. This places it among the lower expense ratios compared to peer strategies by ProShares (QQQA) and First Trust (FTQI). Return on capital is tax-deferred, lowering the cost basis of the investor's position. However, it's essential to note that selling out of the fund may result in a substantial capital gains burden that may not be ideal for most investors.

The covered call strategy can cap performance depending on the growth trajectory of the underlying index between monthly call-writing periods. Nevertheless, QYLG has generally outperformed peer buy-write strategies, though some of the strategies listed in the comparison are tied to the S&P 500 (SPX) and may not provide a 1:1 comparison. It's worth mentioning that QYLG provides investors with 100% exposure to the Nasdaq-100 constituents, with a total of 102 holdings.

QYLG can be best used for estate planning, given the cost basis reset when assets are passed along. However, investors should be aware of the tax implications when investing in the strategy; given the high return on capital, this strategy is only appropriate for taxable accounts.

As of now, the person who introduced QYLG on the Nasdaq stock exchange is not explicitly named in the available search results. Despite this, QYLG has managed to amass roughly $110 million in assets under management (AUM) with an average of $857k worth of shares changing hands daily.

In conclusion, the Global X Nasdaq 100® Covered Call & Growth ETF (QYLG) offers a unique blend of income generation and growth potential through its covered call strategy. While it may not provide a 1:1 comparison with other investment vehicles, its low expense ratio, high distribution rate, and exposure to the dynamic Nasdaq-100 Index make it an attractive option for income-focused investors seeking growth opportunities.

Investment Strategy: Buying Nasdaq-100 Options and Collecting a Large Amount of Capital Return