High Yield ETFs Aren’t Dangerous If You Understand This…
5 High Yield Funds Designed To Avoid Erosion… 🧵👇
1️⃣ $QQQI
Simplicity at its finest. $QQQI sells monthly covered calls while targeting a 14% yield. NEOS gives themselves plenty of room for upside on these calls allowing for a stable nav.
Results:
If you withdrew all of your yield your capital would still be up by 5.23%.
The most impressive part? Full nav recovery from the tariff crash.
2️⃣ $TDAQ
TappAlpha takes a different approach when it comes to harvesting yield from QQQ.
They hold QQQ shares and sell 0DTE covered calls for a 17% dividend yield. Most importantly they give their calls room to breathe to avoid erosion.
The result is a flat nav with total return beating QQQ since inception.
You should know those answers before you ever buy!
I’m going to breakdown strategies across the high yield space.
Put Credit Spreads:
This is my favorite high yield fund strategy when used correctly. Why?
When stacked with the underlying you get full upside while the put spread generates income.
In a bull market a CC fund will never outperform this. In a down market CC funds should hold up better.
A put credit spread is when you sell a put and buy one at a lower strike. Just like selling a standard put you don’t want the stock to go down. You are betting that the stock stays above your strike.
In bull markets you get the full premium and the full upside of the stock. In down markets you get the downside of the stock and the spread. That’s why issuers doing this tend to hedge as well. That’s the trade off.
You’re going to get the most upside in these funds but, also higher potential downside.