My instant review of instant pudding: it is awful. Don’t buy it. Don’t serve it. While regular pudding probably is less than healthy, it isn’t anywhere near as disgusting. The same, however, might not be true about instant covered call mixes.
The ones I looked at for this blog post are: QYLD, NUSI, RYLD, XYLD, and JEPI.
Non-Instant Covered Call Options
For the average investor, trading options is a skill most don’t want to learn. It requires additional training along with a bit of time during the normal trading day. Generally speaking, you also have to get permission from your broker to trade options, including covered calls and puts. So doing this on your own is rather like making pudding from scratch. However, you can use an ETF and let the ETF managers do the covered call trades for you.
Why I like Global X Funds – Global X NASDAQ 100 Covered Call ETF
The ticker symbol for this ETF is QYLD. That is easy to remember: Q YieLD! “Why QYLD”, you ask? Here are the key reasons: 1) QYLD has a decent expense ratio to pay the fund managers for the trading work they are doing on your behalf: 0.60%. Normally I dislike higher expense ratios, but I believe this one makes sense. 2) QYLD continued to make money during the Covid-19 panic. Why? Because volatility can make options trading a very profitable approach to investing. 3) QYLD has good diversification with a focus on NASDAQ technology stocks. 4) The Assets Under Management (AUM) is the best of the peers that I reviewed. 5) The top ten investments are the big dogs of the NASDAQ: Apple, Microsoft, Amazon, Google, and Tesla. 6) QYLD has the best yield, but not necessarily the best performance. RYLD is better in the performance metric.
There is one other piece to this puzzle. Please realize that QYLD is for income. This is not a way to grow your base. However, if you take the dividends from this investment and buy other investments, you have more cash flowing in than you might normally receive from most investments.
Finally, as has been stated often with all investments, there is risk. There is no totally safe investment. Don’t put all of your available cash into this one ETF. Diversify into other ETFs like VYM, DGRO, DVY, FTEC, FHLC, and PFFD.
I own 100 shares of QYLD in my ROTH IRA as a long-term investment. However, I will continue to trade covered calls using my own ingredients.
Want to learn more about options? Go to this link: OPTIONS BLOGS