XYLD
Global X S&P 500® Covered Call ETF
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Ben Felix surveys studies about covered call ETFs (QYLD, XYLD, etc.)
What am I missing with TSLY and XYLD?
If you are interested in derivative income, this is the ETF you should buy.
If implied volatility tends to be higher than realized volatility shouldn’t CC funds overperform against the underlying indexes?
If realized volatility > implied volatility shouldn’t CC funds overperform against the underlying indexes?
Do we have an intelligent guess on blackrock buywrite bond ETFs will perform in long term?
A reminder to check NAV premium or discount on your closed-end funds
What are the downsides to investing in a growth covered call ETF like XYLG or QYLG?
Is this a good start to passive income. Set and forget?
Covered call strategy... back testing not matching expectations.
Wrong Group, But ROTH IRA and YLDs, Long Term IDEA
QUERY: Why do people jack up the price of XYLD after hours knowing that it will likely be valued at the closing price at opening the day following?
Ridiculously bad expiration date timing on covered call ETFs
Dividend Income ETFs to replace High Yield Savings account
Global X S&P 500 Covered Call ETF (XYLD) and Global X Russell 2000 Covered Call ETF (RYLD)
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I don't think it's necessarily the covered call strategy that is broken, but many of those ETFs definitely are. In general selling covered calls will limit your upside in a bull market and reduce your downside in a bear market with overall reduced volatility. Mostly useful if you want income and are willing to sacrifice some returns. You can tell some funds are poorly executed. XYLD uses an S&P500 CC strategy as does SPYI, yet SPYI has 10% higher returns YTD. It also matters how the fund manages a shock like what happened in April. If they again sell short-term near the money calls before a sharp recovery you'd lose substantial gains. Better managers will just go fully long the asset in those cases or only sell calls on a portion of the portfolio.
I don't think it's necessarily the covered call strategy that is broken, but many of those ETFs definitely are. In general selling covered calls will limit your upside in a bull market and reduce your downside in a bear market with overall reduced volatility. Mostly useful if you want income and are willing to sacrifice some returns. You can tell some funds are poorly executed. XYLD uses an S&P500 CC strategy as does SPYI, yet SPYI has 10% higher returns YTD. It also matters how the fund manages a shock like what happened in April. If they again sell short-term near the money calls before a sharp recovery you'd lose substantial gains. Better managers will just go fully long the asset in those cases or only sell calls on a portion of the portfolio.
The fairest comparison is always the CC etf with the underlying holdings, so for QYLD that would be QQQ Since QYLD inception with DRIP, QYLD +152% vs QQQ +704%. Absolutely abysmal dogcrap lmao. XYLD same story. XYLD +154% and SPY +438%
Not with MSTY and other yield max ETFs. Your principal erodes so quickly, you have to constantly reinvest just to keep up. Or you can do the more stable CCETFs like JEPI, SPYI, XYLD. None are perfect but they’re fairly stable.
Compare the performance of VOO and XYLD, which sells monthly covered calls on the same index. If you invested $100,000 ten years ago in VOO, it would have grown to $360,590, a +260.59% return. If you invested $100,000 in XYLD, it would have only grown to $194,140, a +94.14% return.
Show me the comparison between SPY and XYLD over that timeframe. That is the only covered call ETF that you referenced in all your comments that actually tracks an index (you would know that if you were an asset manager). Allow wiggle room for higher fees for the covered call ETF. I can acknowledge that XYLD could underperform, but ideally, these funds should outperform during this timeframe (if managed well). I find this so interesting because I have met many of you online, you're clearly interested in investing, but you're spending a ton of time and energy on building this online persona. Why not just work hard then do the things you recommend for yourself and see how it works out? No asset manager is selling advice for free online, and hopefully we can both agree that no asset manager is editing a post from 5 days ago with 33 comments total. I engage with folks like you because it bugs me, but in the end I have compassion.
Well, then this is a classic example of retail being retail. You’re literally buying an investment for the wrong reasons. If you don’t want the income then you shouldn’t be buying JEPQ. Look at how JEPQ or any of these covered call strategies have performed YTD in a highly volatile market(JEPI, XYLD, etc). Their total return is below their index. You need either down or fairly flat markets for these CC strategies to make sense. Or the priority is just income and you’re not as worried about total return as you’re not touching your principal.
I have about $100k in SPYI and about the same in XYLD. The SPYI seems to perform a bit better.
Your math is woefully incomplete. Options aren't free money. Your puts will be assigned sometimes, and then you will lose money. And then when you sell your calls, they will get called away and you will lose upside. The combination is such that you wind up earning less running the wheel than if you just held the underlying. This is both true in theory (because you would expect a fair market to price options fairly, and you are making a risk-off trade) and in practice (you can look up simulations of wheel performance and see that it tends to underperform simple buy-and-hold). Or, if you only want to look at half the picture, you can just look at the historical performance of a call-selling ETF like XYLD vs. SPY.
If you don’t mind, when you say covered ratio do you mean 100shares + long atm / -2x otm for 0 debit? What do you think about XYLD, is that the same?
It may work but it’s not as likely to hold up as a standard stock/bond portfolio in all markets. The problem is that you’re significantly limiting price growth, which limits your ability to increase annual withdrawals. You’re likely to be more stable in the short run but to underperform in the long run, which could leave you poorer in your later years. After 30 years of inflation your annual withdrawals may need to double what they are now. How are you going to do that with CCs? The traditional benchmark for retirement funding is 4% per year. This is a conservative figure but it accounts for both inflation and the risk of sustained market downturns. The CC approach offers no organic way to easily increase withdrawals and its arguably more at risk for turbulent markets. You can see the performance of CC-based ETfs for yourself to verify. Look at XYLD or SPYI vs plain SPY. SPY has a higher total return.
Imagine buying XYLD instead of doing Covered Calls yourself 
Every single hedge fund does it…. How do you think $JEPI $QYLD $RYLD $XYLD and all the other pay dividends?
XYLD and VOO. Break down your $5 and add $2.50 to each every time you have $5 extra.
You don’t have to get assigned every week. The question is how much money you lose when you do get assigned. Even if you’re selling far OTM, that just means that you lose out when one big week hits. You can lose a year’s worth of premiums all at once. Just look at the performance of any CC-based ETF like XYLD. And you can find simulations of the wheel that also show underperformance.
I embrace the volatility by having covered call etfs for similar markets. Simplifies my portfolio and allows me to buy/dca into equally sized buckets. Three asset classes, in pairs. One ticker for growth in low volatility. Another in same asset class for volatility income. SPY/XYLD TLT/TLYW GLD/IGLD
QYLD or XYLD at dividend yield 10-13%. Gives you your dividends monthly which you withdraw and spend or roll over into it.
Sounds like you are young, so best to buy index fund and forget it. If your goal is to make money. I think there is some argument for covered calls, even though on average they make less than an index fund (there is a covered called index fund, XYLD that is exactly that), and it consistently underperforms SPY. I have been playing with options to see if I could use them like an alternative, such as gold does in a portfolio.
It has its places, perhaps you could use it as a task list to dive deeper into rates at their relative sources. Extra work, I know but oh so worth it. Maybe it will let me post a distilled list you can research further. Best of luck! # Low-Risk Options (Short-Term & Liquid) * Treasury Bills (T-Bills) * Treasury Notes & Bonds * I Bonds * High-Yield Savings Accounts (HYSA) * Money Market Accounts (MMA) * Money Market Mutual Funds * Brokered CDs # Moderate-Risk Options (Yield + Some Growth) * Municipal Bonds * Corporate Bonds * Bond ETFs (e.g., BND, LQD) * Dividend-Paying Stocks & ETFs (e.g., VYM, SCHD) * Preferred Stocks # Higher-Risk, Long-Term Growth Options * REITs * Covered Call ETFs (e.g., JEPI, QYLD, XYLD) * TIPS (Treasury Inflation-Protected Securities) * Private Credit & Alternative Lending (e.g., Fundrise, Yieldstreet, LendingClub)
You can do that: [https://finance.yahoo.com/quote/XYLD/performance/](https://finance.yahoo.com/quote/XYLD/performance/) \- covered call ETF.
People looking for passive income should of just throw everything in XYLD 👀
Depends on your risk tolerance. No risk tolerance, go CLOI. Some risk tolerance, go XYLD, XDTE QYLD QDTE. And onward it goes to more risk more reward.
QYLD or XYLD at about 12% dividend yield and gives it back you every month. With $2M, it gives you about 240K per year or 20K a month without dipping into your money and capital gains. With that money, I would probably just travel, live everywhere overseas and try not to own anything and just enjoy life everyday.
The ultimate passive income machine in the market is dividend growth investing, that can be more passive than damn near anything, literally anything...it's a true form of passive income. I never liked wheeling just to wheel for income, I messed around with it years ago just to get experience with it, found it to be tedious, boring, and a lot more work for not that great of returns imo. I think CC and CSP are best used in conjunction of your long term positions to squeeze a little more out or collect more shares..get your average down etc, but wheeling for like income or whatever? Nah, just buy broad market covered call etf like XYLD or QYLD. It definitely can be a time bomb, CC and CSP can be somewhat dangerous especially CSP.
Thanks for sharing, hope you are recovered and well. I was looking at the phrase: > I was looking for a "safe" way to earn 10% on that, and found the XYLD/QYLD/RYLD family of ETFs that return about 10%/year doing a CC strategy on the major indices. So you never got into them in the end? Do you do any ETFs or mainly LEAPS on stocks? I'm currently only writing PUTs on stocks but looking to do PMCCs. Hence the question.
You can certainly do that and spy has the options liquidity for this. The etf XYLD is a basically SPY that writes covered calls. One thing that always surprised me is that XYLD tends to underperform SPY. https://portfolioslab.com/tools/stock-comparison/XYLD/SPY But you are talking very small amounts. Maybe 3% extra APR. for me personally it’s not worth it and with my index fund holding that is more “set and forget” mentality for me. Also depends on tax implications. If a covered calls gets exercised and you all of a sudden have realized gains, may be an issue. With high quality stocks like AAPL, Meta, GOOG, NVdA, etc. you can probably get closer to 20% APR with low deltas. Higher volatility stocks like PLTR might get you closer to 30-40% apr. of course higher risk of exercising even with low deltas. Also, if you are looking to enter a position, the premiums on cash covered puts are even better.
Aim a little lower, put it into XYLG/QYLG/RYLG, get about 7% divis in the year while still maintaining exposure to upward movement on the big indexes. You would get around 1750 a month and your capital would still decently track the market. If you need income primarily do it with XYLD/QYLD/RYLD but know these good chance your capital slowly deteriorates
Are you really making money from selling covered calls? Because the ETF XYLD is not going well compared to SPY: https://portfolioslab.com/tools/stock-comparison/SPY/XYLD Are you doing it better than XYLD and why?
You don't really have to invest that much to get a 300€ return tho? 3k in XYLD gets you that a year and it pays monthly. Just saying not for it or against it, but it's not all black and white
If I understand you correctly, what you are looking for is an additional cash flow, and you are looking to generate an additional cashflow of $1000/month. For you to gain perspective, I like to structure returns in a hierarchy of risk vs return, starting with low risk for low return; this list will be specific to passive income generation. Savings account - this is the least risky place to "invest" and will get you the lowest return possible. GIC's - you are guaranteed a specific return (usually hovers around what the interest rate is), and aside from a collapse in the system, is the next least risk to take. Bonds - there are various types of bonds that have their own risk profiles and their own returns. The least riskiest Bond would be a government bond, paying around the interest rate (depending on the length of the bond.) Dividend paying stocks/ETF's - The "safest" dividend paying stocks would be called Blue Chip stocks, they average maybe 4%-6% return a year. Then you have you basket of stocks which would be ETF's. Within the ETF category you have specialty ETF's that could return 5%-20%, these would be something like a SPY ETF that uses a Covered Call strategy to generate income (XYLD is currently returning 9.64%), or a REIT that could pay above 10% (this category should be thoroughly research as it has unique risks). The caveat is that the stock/ETF category carries the most risk; the price of the stock/ETF could decline and never recover, thus reducing your income and original investment amount, dividends could be reduced to ceased all together, you are exposed to market declines (2008, COVID) where you see your income decline for a period of time. A point to note, investing 100k for passive income comes at an opportunity cost, and that cost is that the 100k won't grow that much (if at all) in comparison to investing it for growth. You could park the money to generate passive money and help you now (which there is nothing inherently wrong with), or invest it or growth and see that amount possible double and then have more money later. I personally am in your camp where I have money that is solely used to generate passive income, but I forecast my future money requirements and invest money to meet those requirements as well. Take a holistic look at your current and future financial needs and make a decision off of that assessment.
i doubt it will fail, but in the long run, it likely will not pay out as well as buy and hold. when i first heard about qyld, i also thought it was really great because of it's killer, constant dividend. it's easy to be fooled. then you do a comparison to buy and hold QQQ. and in like 12 years, probably less, QQQ beats it. i think XYLD does the same 30DTE CC thing with SPY, and i'm pretty sure buy and hold SPY beats XYLD also. and i bet SPY will beat XDTE also. heck, QYLD opened my eyes to high dividend stocks in general. i did a lookup on a few stock info sites. and then they started auto suggesting me all of these other ones i never heard of. so i looked at the info/details they mentioned on these other ones that had just......insanely high payouts. they were just bonkers/insane not good in the long run. during covid times, they maybe had 1 or 2 years of 30% payout. but then the rest of their history was 1% payouts. or they had only existed for 1 year. it was clear people could "make a high dividend stock with any premise, decide to pay it out at any rate". about the only one i really care about is SCHD.
JEPI and XYLD are fine if you want the dividends, but I wouldn’t hold them if you’re hoping they’ll grow every year (XYLD in specific is a bit self consuming due to its strategy so it’s definitely not going to appreciate in price). If you reinvest dividends you might get some solid yoy returns but you’d have to do the math. SCHG is going to have a lot of overlap with VOO but it will give you some extra large cap exposure. It’s pretty tech heavy though, so if you don’t mind the extra tech exposure then I don’t see why not.
Why are you in JEPI, XYLD, BIV, and O in the first place?
Longterm? I like ETFs like XYLD some info https://www.globalxetfs.com/spotlight-on-xyld-an-sp-500-covered-call-strategy/ Short term I like to expose myself a bit in contacts - only how much I’m willing to lose as lately it feels more like gambling with some moves in the market making no sense but also I like growth stocks with low institutional buy in and lower shares. Long 50% short 40% contracts 10% profits into long.
I think this is basically what XYLD does (a bad CC fund)
There are ETF that sells CC for you aka the pro folio manager takes of it. RYLD and XYLD are some examples. You can sell cash secured PUT as well.
XYLD is a covered call ETF, it yields 9% annually without the risk of being assigned.
Thanks! Didn't know XYLD or portfoliovisualizer exist. :)
if you go into portfoliovisualizer you can do -100% XYLD and +100% spy and it'll be more or less a one times leverage, then just up the percentages to your desired level, of course, this doesn't account for costs associated with achieving leverage.
Thanks for sharing that seems like reasonable balance. UPRO giving your portfolio growth while XYLD gives you income.
What's the point of using covered calls if it underperforms? Why not just buy SPY or a SPY ETF that doesn't sell CCs? XYLD 52 week performance: Down slightly with a 9.61% yield. SPY 52 week performance: Up 23.9% with a 1.34% yield.
Not sure which ones you looked at, I have invested in XYLD and intended to keep it for long term. It has been around since 2013 and avg return with dividend reinvested is around 7-8%. Slightly under-perfoming spy but love the monthly consistent payment. XYLD definitely is not scam and pays more than savings account.
Here is a comparison of the 10 year total return of XYLD and SPY. XYLD writes covered call on the SPX index. The total return of SPY is 3 times larger. [https://totalrealreturns.com/s/XYLD,SPY](https://totalrealreturns.com/s/XYLD,SPY)
I’m not sure if this website correctly calculates the dividends but it seems to. https://finmasters.com/stock-calculator/?sa=XYLD&d=20140505&a=10000
I know a lot of folks like the income - I’ve been burned a few times by good dividend payers Now if I want income I go for the monthly payers like QYLD and XYLD. They pay a monthly income of approx 10-12%.. the % was higher but they’ve increased in value the last 6 months Obviously it depends on the level of risk…. You can get 5.3-5.4% on treasury bills (call it 5.75% because there’s no state tax on these) so that’s the baseline of any income stream
The concept of using index options to generate income is not unique. It is used by covered call ETFs that pays a high rate of dividends. For example, XYLD owns all 500 stocks in the S&P 500 index but sells only SPX calls. QYLD sells NDX calls and RYLD sells RUT calls. All option strategies have risk. We have to plan to mitigate the risk. First, we do a worst case scenario evaluation. Each person has his own perception of worst case. My worst case is when the put becomes ITM. When the puts become ITM, the margin required increases while the BP decreases. So we will analyze how much margin is required if the put becomes ITM. (Each broker has different requirement.) Sell 4870 put for 5.50. NDX is at 5254. The initial MR of the put is 50 K. It increases to 125 K if put becomes ITM. When the put becomes ITM, NDX has dropped 7.5%. Assuming BP has also dropped 7.5% to 278 K means the account can support 2 puts. Next, we look at delta. The 4870 put has a delta of 0.05. It is 7.5% OTM and sells for 5.40. If we lower the delta to 0.04 and sell the 4820 put for 4.55. The put is 8% OTM. Is the return acceptable for the extra safety? (I use 0.04 delta.) Finally, the exit strategy. The puts have very low delta. My exit strategy is simply to roll out. These are naked puts so it can always roll out for a credit. I rolled out of the pandemic months.
Yes many covered call etfs such as XYLD
I have 75% in Div stocks and ETF. My main holdings are JEPI, XYLD, and some other JPMorgan ETF. They are pretty stable with small expense ratios and 7-9% Div payout.
I mean SPX and NDX. Check out the holdings in XYLD and other covered call ETFs. You can pretend you are wheeling. When your put is assigned, sell call. Your call is covered by cash or equivalent.
There is no right or wrong option strategy. If you are happy then it’s the right strategy. Your strategy is similar to the one used by some covered call ETFs, like XYLD. XYLD has a long history of paying large dividends. There is a benchmark for this strategy. It’s called the S&P 500 BuyWrite Index with the symbol BXM. XYLD use it as a benchmark. There is also an index called the S&P 500 2% OTM BuyWrite Index. You may want to take a look at it. I like this strategy. My strategy is very similar but using Index options. It’s similar in its simplicity and potential for large income.
$JEPI , $HE, $XYLD and turn on DRIPs
My portfolio is a typical buy-and-hold portfolio. Some stocks are not suitable for options because of very low cost basis or very low volatility. However, the portfolio has buying power to trade options. The most efficient way to generate income from options is to trade index options. Some ETFs are using this strategy. XYLD, an S&P 500 covered call ETF, owns 500 stocks but sells only SPX options. QQQY, a QQQ 0dte ETF, does not own QQQ but uses the buying power of Treasuries to trade.
Still not going to get the ROC with CC's. Plenty of research out there. Even with that rate, you'd be making something like 50bps annually using XYLD with a higher volatility and worse Sharpe/Sortino? Why even bother?
XYLD sells SPX covered calls for income. It has a 10 year history.
Mix in a little QYLD XYLD JEPI JEPQ
Against my better judgment - because it would be *really* fun to see this blow up on you - I'm going to educate you. Whenever you see an ETF or whatnot implementing a covered call strategy, it is always instructive to see how its performance relates to the underlying. Compare XYLD vs. SPY, for example, or QYLD vs. QQQ. What you will see, time and again, is that over the long run the CC ETF underperforms its underlying security. And guess what? That's true with TSLY too. You're looking at one year of performance: 40% from inception to the present. Meanwhile, its underlying stock, TSLA, has done even better! Depending on your starting up, it's up almost double from its low point last December. In other words, TSLY has done worse than TSLA. That will be true in most years. So let's revamp your strategy: would you be comfortable borrowing at 13% to buy TSLA, and then selling it off in small chunks to pay off the loan? And continuing that for 7 years?
I see there are 129 upvotes for commenting “impossible…”. I think it is possible so I did not join the mob to cast an upvote for impossible. I suggest that you study the results of ETFs that trades in options to formulate your trading plan: XYLD sells SPX covered calls and it pays a 10% dividend. TSLY sells TSLA covered calls using a synthetic long strategy and it pays a 60% dividend. QQQY sells 0dte NDX covered calls and it also pays a 60% dividend. There are other ETFs that use other strategies. Your strategy does not have to be complicated. I am retired and my option income exceeds my pre-retirement salary with a 3% raise each year.
The siren call of "income" through covered calls is difficult for some to resist. But I suggest you plug your ears with the wax of total returns. Here's a comparison of a couple covered call ETFs vs the underlying: QYLD 5 year total return 5.6%, QQQ 19.02%. XYLD 10 year 6.08%, SPY 11.68% If you're looking for "income" you will most likely get the best returns by concentrating on total returns rather than dividends or "income" or option premium and then obtaining your income from a combination of dividends and selling stock as needed. If you are concerned about selling your holdings vs getting income from the covered calls but retaining the underlying, I encourage you to look at the long term charts for any covered call ETFs with a long history. Also keep in mind that many countries offer more favorable tax treatment for capital gains (selling stock for income) vs option premium.
XYLD looks pretty safe to me, $39 a share, divided by $25k, is 641 shares. The stock doesn’t move at all the range is between $37-$45. And the dividend rate is $0.4/month per share. So with your $25k/investment you would get a free $256/month in dividends, or $3k/year. Now with reinvestment this would grow exponentially. Or you could wait for spy to break a low or high on a day, and all in on SPX calls or puts. Dealers choice. **This isn’t financial advice, I am 18 years old with $8500 in wagers at a crypto casino **
In an effort to avoid selling in the money puts and covered calls. I've been looking at etfs that do the same thing. I found a global fund XYLD which looks good but for the put side all I can find are PUTW by wisdomtree. What I dislike about PUTW is it looks like a etf of etfs. Or sell puts on etfs. Where as XYLD is a basket of stocks with covered calls. Is there a sell put etf that has their holdings set up on individual stocks?
Look into an EFT that implements the covered call strategy (like XYLD) before deciding to do it yourself. The only reason to do it yourself is if you think you can do better.
If you assume a fair market - which you should - doing this will result in steadier but lower returns than just regularly holding SPY. Option buyers are not going to buy options unless the payout when they do hit is worth the premium. Which means for you (as the seller) is that you will lose more money (in the form of lost gains) when your shares get called away than you are collecting in premium. You can see this pretty easily for yourself. There are several ETFs that are built on holding an index and selling CCs on it, so you can simply compare the returns. Look up XYLD vs. SPY, for example, and you see what I mean.
There is no ETF that specifically follows a horizontal put strategy for the S&P 500. However, there are a few ETFs that use covered call strategies, which can generate similar results. Covered call ETFs sell call options on the stocks that they hold. This gives the buyer of the option the right, but not the obligation, to buy the stock at a certain price on or before a certain date. Here are a few covered call ETFs that track the S&P 500: [JEPI](https://usaheadlinewebstories.com/jepi-dividend/) (JPMorgan Equity Premium Income ETF) XYLD - Global X S&P 500 Covered Call ETF DIVO - Invesco S&P 500 Dividend ETF
Selling CCs is guaranteed to underperform the market. See XYLD for instance.
Look up XYLD, I am adding money to it and holding it for long term. Fairly stable as far as I can tell.
XYLD works best during sideways action. We've been on a ridiculous decade-plus bull run, so obviously it's underperforming. That's how the math works. Nobody is disputing that.
you would still triple (x3) your money by just holding SPY versus XYLD. Also the tax treatment is much better on SPY since on dividends you pay 25% (foreign investor) withholding tax, on SPY you don't pay tax at all till you sell so you make so much more money that way. ​ If you sell not ATM calls the premium is getting very low to the point that if there is a big bull rush you missed it for a very lousy reward. ​ I would never recommend it just to "generate income", if you really anyway want to sell the stock like the person below me said, then ok that would make sense.
You're getting downvoted because you're not accounting for distributions. 5Y, SPY is +59.43% total return. XYLD is +17.22%. Also, XYLD is not the end-all for selling covered calls as a strategy. XYLD sells calls at the money to generate premium for an income strategy, so they're constantly getting exercised and having to buy back in. You don't have to sell CCs ATM. If you sell around 0.05 Delta, you rarely get exercised, and when you do, it's *usually* at the exhaustion leg of an insane bull run, which is where you'd want to sell, anyway, if you're trading.
I originally had like 90% of my portfolio in QYLD because it has the 30 day yield and it was pretty much reinvesting and buying me a whole new share every month which was nice. I cut back on it tho to spread out my portfolio as learn more about the market. So i haven’t really experienced it through a bear market really to answer your question. What does XYLD track?
Not investment advice just an overview of current environment. "Risk free" U.S. Treasuries are currently paying around 5.4% on for holding them for 6 months to 1 year. A little higher on the risk scale there are decent dividends on ETFs such as JEPI, JEPQ, QYLD, XYLD, VOO, etc. These will return 7% - 9% currently. A little higher still there are ETFs that seek to capitalize on the movement of stocks like Tesla, Nvidia, Apple, Microsoft. Those are TSLY, NVDY, APLY, MSFO, respectively. These can yield 10%-15% or more depending on how the underlying stocks perform. I personally also put 10% of my portfolio into Bitcoin via Dollar Cost Averaging over time.
CC ETFs like XYLD aim to distribute about 1% a month, so you could get 1800/m from 180,000 if the entirety of it was in \*YLDs probably. You could then invest the other 220k in VOO or something else. If that other thing produces its own dividends, you could shrink what percent is going to \*YLD until the numbers work out to 1800/m. Because \*YLDs often cannibalize their own asset base to maintain payout levels, you may have to regularly add to that portion of the portfolio, either with dividends from the other side of the puzzle or by contributing more money to the account. You could also reinvest some of the 1800/m if you didn't spend it. There's nothing out of the ordinary here. A 5.4% yield is not that high.
Obviously this is not investment advice but I'm in four of Global X (my personal weight varies because I also can read candle charts) $XYLD $QYLD $RYLD $DJIA and I'm experimenting hedging with $SVOL (by Simplify)
>XYLD has barely made any money YTD - just barely breaking 5%, meanwhile SPY has appreciated 15%. XYLD is touted as a fund that shouldn't lose money in a bear market but it has done exactly that Just wondering about your statement. YTD, we've had a bull market, not a bear market. The average annualised return over 10 years shows 6.96% for XYLD and 12.82% for IVV. Anyone getting into XYLD should know that they're doing a yield play while capping their upside and the product seems to have done just that?
>They are connected for tax purposes since you have the decision to make either getting assigned (taxable gain) or rolling over (taxable loss). Not quite. From a tax perspective there's no difference between rolling or doing separate BTC/STO transactions. You're talking about the difference between getting assigned or doing BTC, but that decision is mostly independent of whether you STO a new position afterwards or not. 1. Get assigned = immediate gain. 2. BTC = immediate loss, position still has unrealized gain. 3. BTC then STO = deferred loss due to the wash sale rule, and now you have two positions, the original shares with unrealized gain, and an option of undetermined gain/loss, with TBD tax implications depending on what happens. But 3 would apply even if you BTC one day, wait a week or two, and then decide to jump back in. >The majority of my trades should theoretically be outperforming simple B&H since I'm selling significantly OTM Logically, it's the opposite. You're making a fairly 'safe' trade by selling an OTM option. The buyer is taking on a ton of risk. Assuming a fair market (which you should), the buyer will get higher expected returns. I.e. those lottery tickets they're buying have to pay off for them sometime, otherwise they'd have no reason to buy them. Meaning that in the long run you will lose more money (in lost gains) than you are collecting in premium. You can see this in action: just compare any CC-based ETF like XYLD to its underlying SPY. In the long run the CC-based ETF underperforms, but with a generally higher floor. Lower volatility, lower returns. That's the trade-off you're making when you sell CCs. >but I'm only limiting until I rollover until I'm back OTM. The risk I bare is if they spike too high and stay high that point may never come. This changes it from lost money to lost *time*. You're preventing yourself from realizing a loss, but you're pushing out the day on which you get to close out the position, recover your capital, and use it for your next position. You could spend months or years waiting for that to happen, without collecting any new premium. And while you're waiting through that long window, one crash can erase everything you've gained. >I'm only doing this on stocks I have a long-term belief in and are already holding positions of, so I'm taking the downside risk of a stock crash anyway whether I'm selling calls on them or not Correct - you're not adding any *new* downside risk. But the downside risk of regular B&H is balanced by the upside. Sacrifice enough upside, and that downside risk is no longer worth it.
These are income-category funds, they're designed for old normies (retirees in low tax bracket) to get cash in their bank each month. High dividend yield has been a convergence of historical dividends with falling share prices. JEPI and JEPQ are big stable funds taking the lead in this area, but we're watching market forces in real time as their prices *increases* rather than drops with each dividend payout cycle. These funds are on a different schedule than XYLD or SCHD so you could sell out of one and buy into another every month if you wanted to. (I've actually been doing this and it returns about 2% a month so far, with nothing going wrong. That's a great rate btw.) Equities are so overbought and insane and JPow'd that I fled to this instead.
Looking at its dividend per share and share price for the past six months makes me feel otherwise... QYLD has been pretty consistently at least 1% per month, for example its.dividend last week was .1797 per share and the share price was 17.92 (slightly more than 1%) it's also based on NASDAQ index, and the dividends are from the fund manager writing calls on those NASDAQ constituents, rather than dividend income on each company. You're not going to find good companies that pay a 12% annualized dividend with a steadily increasing stock price, but expert call writing on NASDAQ makes it sustainable. QYLD is the kind of thing I can hold through corrections and crashes and know it'll be back at ATH eventually, whereas random individual stocks (esp ones that send their money out to shareholders) may not recover ATH. Looking further in to it... JEPI may be similar but S&P based, in which case XYLD seems like a better option, either way I prefer NASDAQ.
flipped my shitty SVC position into 2k shares of DISH - flipping my XYLD to AMZY tomorrow. I don't think the cell phone for prime subscribers is the last play they'll make together.
The **theory** is simple: unless you have a reason to think otherwise, you should assume market prices are fair. A call option (what you're selling) is a highly volatile investment. You would not expect the buyer to buy that option unless it has the statistical likelihood of paying off for them, which means they will, on average make money from buying that option. *Your* money, specifically. You are paying them in the form of taking a big 'loss' whenever the stock spikes and gets called away. You are getting smoother returns over time. In a fair investing world, smoother returns are associated with lower returns. So the theory says that if you do this over time, you will lose out on more upside from missing gains than you will add to your returns in premium collected. But does it work that way in **practice**? Yep! This is easy to demonstrate because there are already funds that do exactly what you describe. XYLD, specifically, holds the S&P 500 and sells calls against it. [You can compare its returns to SPY](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=SPY&allocation1_1=100&symbol2=XYLD&allocation2_2=100) and see the lower return over time. It did better in 2022, and it has provided steady dividends throughout the period, but the overall performance is notably worse. (There are other funds out there that also do this strategy. JEPI, for example, has a better record, but it's far too new to make any long term conclusions).
About 25% is in TSLA. This is a play from 2017 so it’s helped a lot. I originally bought in at 30k and sold half when it was about 400k to pay off one of my houses. Now it’s more than doubled again so still holding. Target is 1k in a few years. Writing is very much on the wall for auto and energy industries so it’s just a time thing. About 1/3 is my dividend account which is a long term play to try and help replace our income if our business fails - it makes about 6000-6500 a month (about 10% yield) on QYLD, RYLD, XYLD, JEPI, and SCHD. I add $1k every week on top automatically to this. Right now using the dividends to pay off a margin loan on this account. We used the margin to build an ADU for our house. This added about $1m in value to the property but also generates about 50k rent. The only other individual stock is MSFT which I have from the old days of working there. Cost basis is like $39 on these and I continue to hold - it’s like maybe 6-7%. Also hold about 7% FDGRX - an old closed fidelity fund that performs well. Everything else is mostly indexes as well as some SQQQ which is interesting. I’m mostly buy and hold as do put and covered call writing for more income. I never buy options as that’s just gambling pretty much when you add in the IV decay. I’d rather be on the other side of that coin like with trade as you just win almost all the time.
It’s all a game just have to play the right game with life. Next play dividend stocks so you don’t have to take an L. Go Jepi or Jepq! XYLD, or CRM allittle more risk try TSLY Divy UpUp tell them Bigplay sent ya
lurk in /r/thetaGang and look up this (well written) book by Tasty channel personality, also JEPI/XYLD type ETF's https://www.wiley.com/en-us/exportProduct/pdf/9781119882657
You might find useful the info within the publications/prospectus of covered call ETFs like XYLD. It’ll have information from professional money managers instead of subjective opinions of internet strangers
The more I think about it, the more I favor orienting 50% of the portfolio toward uptrending markets and 50% of the portfolio toward sideways markets. You can accomplish that a lot of ways. Some % VTI and some % JEPI can do it. I haven't really played around with the numbers enough to be able to say exact percentages. Numbers would be easier with VTI and XYLD at 50/50. This portfolio should also lose less in down markets than 100% SPY does, though it will recover more slowly also.
Try ETF “XYLD” pays ~12% dividend, which is tax free up until $78k. That 100k would provide 1k monthly and remain tax free for life.
Just look at XYLD, a covered call S&P 500 fund vs SPY performance. The covered call ETF has lower drawdown, but reduced performance/returns. https://portfolioslab.com/tools/stock-comparison/XYLD/SPY#
TSLY does not have a long term success rate of paying dividends consistently XYLD loses value because they sell ATM calls and thus in a bear market the value of the actual principal slowly will diminish. XYLD has barely made any money YTD - just barely breaking 5%, meanwhile SPY has appreciated 15%. XYLD is touted as a fund that shouldn't lose money in a bear market but it has done exactly that
Nah. 30% dividend is absolutely not sustainable in any way. Anything that ever paid a dividend above at most like 8% has not been sustainable. LUNA tried to pay a 20% dividend and the entire history of that was effectively that it was a ponzi scheme-esque crypto that was brought down by exploiting what in all honesty was a rather obvious flaw. the dividend ETFs like QYLD and XYLD fail because they pay their dividends by selling ATM calls which doesn't work in a bear market, which is why QYLD and XYLD have both lost principal value. Hell even the more tame long term treasuries have lost value despite paying 5% because they aren't able to be cashed out for that long period of time. If a 30% dividend was sustainable, nobody would need to work anymore once they got enough money to live off that 30%. which wouldn't take long for some. a software engineer could save two years of salary, throw it it into a 30% dividend fund and quit straight away
Definitely a risk to consider. From my understanding they do TSLA covered calls to generate their returns. I figured diversification into another similar ticker such as XYLD would ease my stress. XYLD has around a 12% yield unlike TSLYs 30% + yield but XYLD uses the S&P to generate revenues. I’m expecting a downturn within the next year before we hit another long bill run. But none of these “monthly dividend 10% +” funds seem to have existed prior to the Great Recession which is causing me to have caution.
You need to understand what JEPI and XYLD actually are. They generate premium by selling OTM covered calls. This is "free money" when the underlying stocks are flat or down, but when it goes you get assigned and miss a lot of gains. So long term they're only better than holding if you believe the market will be sideways for a long time.
> I want to retire early but am afraid of having a bunch in stocks and/or bonds and suffering a major crash of some sort and not being able to weather a sustained stretch where I keep withdrawing 3%/yr to live off of. On 4.5M of capital? You'd have to try really hard to set up a portfolio that was so bad that you couldn't weather a recession that lasted 5 years. You could put half of the 4.5M into fixed annuities that paid you 2%/year and lose all the rest of it and still be fine. > As of the market now, I could sell SPY 1 yr CSPS way OTM (like 20+% off current price) for premiums in the range of $140k total. What does this part have to do with the previous part? **Any active trading**, not the least being risky options trading, would be more of a threat to your wealth than whatever you fear about major crashes or recessions. > I’m confident in thinking about this that it would underperform the market without a tremendous amount of luck. Correct. [Here's a covered call fund compared to SPY.](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=1985&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=SPY&allocation1_1=100&symbol2=XYLD&allocation2_2=100) SPY has twice the CAGR and about 50% more Sharpe Ratio than XYLD, even though the crash and financial turmoil of the pandemic years are included in that backtest. > But from an income and risk perspective, how stupid an idea is this? As stupid as any idea that *caps your upside on your equity market exposure*. The whole reason for having an equity market exposure is the unlimited upside and the tendency for large countries with GDP growth to express that growth through the equity market.
JEPI does not use covered calls, read the prospectus or visit r/JEPI. XYLD is using SPX covered call and QYLD is using NDX. Both XYLD and QYLD are not so great compared to holding VOO or QQQ holding! Better to buy/DCA/hold JEPQ than JEPI !
Check out ETF XYLD. Covered call strategy on S&P. Compare performance over time and you’ll see where the flaws are with it. CBOE also has historical index of the buy/write strategy (BXM).
Don't forget XYLD! - QYLD = Nasdaq - RYLD = Russell - XYLD = S&P I like JEPI the most though.
Yes. JEPI, BST, DIVO, etc do some variation of the same thing. Others like QYLD, XYLD, RYLD are strictly generating as much cash as possible with options and don't grow. They've got down while markets have gone up and are to be avoided IMO unless you are desperate.
XYLD paying out like 12.5% div right now hnnnggg
Even going down, you lose less though. Really in bear or choppy market it historically outperforms the underlying. Stuff like QYLD or XYLD will beat the underlying going down too.
If you want to covered call s&p XYLD is also an option it'll do all the work for you.