Thesis
The Nuveen Nasdaq 100 Dynamic Overwrite Fund (NASDAQ:QQQX) follows a covered call strategy on the Nasdaq 100 Index to collect premiums and provide high current income distributions. Compared to a similar fund that I've
QQQX: An Assessment Of How It Works And Whether It's A Good Fit For You
Summary
- The Nuveen Nasdaq 100 Dynamic Overwrite Fund follows a covered call strategy on the Nasdaq-100 Index to collect premiums and provide high monthly current income distributions.
- The strategy is to sell only call options on about 55% of the assets as a long-term target to strike a balanced tradeoff between current income and total potential returns.
- This article performs a closer examination of the fund and explains how it works, especially by a comparison and contrast against a similar fund.
- The results illustrate its pros and cons in terms of income, growth, and volatility, so potential investors could make more informed decisions.
Sensor Unlimited is an economist by training with a PhD, with a focus on financial economics. She is a quantitative modeler and for the past decade she has been covering the mortgage market, commercial market, and the banking industry. She writes about asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets.
Sensor Unlimited contributes to the investing group Envision Early Retirement which is led by Sensor Unlimited. They offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request. Learn More.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of QQQ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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