QYLD - options income

[keppelbay]

There is an interesting piece over on SA about the performance of option income ETFs. It is very negative about TSLY, but also makes a point about QYLD. I've see QYLD mentioned here at BB, so this may be of interest to some of you.

in brief:
NAV erosion because it participates in market downside more than upside. (a bug/feature of option income funds, not unique to these funds.)
High distribution yield also erodes NAV, as paid whether option income and/or trading covers it or not.

There may be circumstances in which option income funds are useful, but after reading this, I think I'll be looking elsewhere for stable long-term income...

seekingalpha.com/article/4642829-tsly-good-in-theory-disastrous-in-practice

[yogibearbull]

It isn't even good theory. Traditional call-writing is used for boring, mature companies that don't jump around much and then almost steady call-writing income is pocketed. But it isn't good to do that for an aggressive index (QQQ; so QYLD) or stock (TSLA; so TSLY, too new). That caps the upside, but doesn't protect the downside.
Note high correlation between QYLD & QQQ, stockcharts.com/h-sc/ui?s=QYLD&p=D&yr=1&mn=0&dy=0&id=p09791573779

[anitya]

keppelbay,

We talked about this stuff in the context of JEPI. Search for the last few posts on JEPI and then add yogibearbull post here to sum it up.

I am always hesitant to say anything because somebody's beliefs / interests will get offended. I found not reading SA articles saves me time. I also do not want to touch the hornet nest of income vs total return investing in equities.