MThe madness in the financial markets had less to do with basketball than with volatility. However, this has opened up opportunities for fixed income potential with the Global X Nasdaq 100 Covered Call ETF (QYLD).

The Nasdaq 100, in particular, has been subject to high volatility amid rising inflation. The index entered bearish territory in March as investors dumped risky assets amid the Russian invasion of Ukraine.

“It was a chaotic month as stocks rebounded from the selloff that began at the very end of 2021 and fell 20% in mid-March,” notes an Investing.com article. “The declines were triggered by the Federal Reserve’s decision, reported in November, to bring it under lockdown.”

Income during low rates

The US Federal Reserve raised interest rates by 25 basis points recently, but for fixed income investors it is still a relatively low-yield environment. As such, they are looking for opportunities for more yield – something QYLD has with a 12% payout yield.

QYLD follows a ‘covered call’ or ‘call-sell’ strategy in which QYLD buys shares of the Nasdaq 100 Index and ‘sells’ or ‘sells’ corresponding call options on the same index. As such, not only does QYLD offer equity exposure, but the ETF also offers an income component.

In today’s low interest rate environment, fixed income investors understand how difficult it is to try to extract as much income as possible from public debt. QYLD seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the CBOE Nasdaq-100 BuyWrite V2 Index.

QYLD offers investors:

• High Income Potential: QYLD seeks to generate income through the writing of covered call options, which historically produces higher returns during periods of volatility.
• Monthly distributions: QYLD has made monthly distributions for six consecutive years.
• Efficient Options Execution: QYLD sells call options on the Nasdaq-100 index, saving investors the time and expense of doing so individually.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.