QYLD Vs. RYLD: Embrace The Fear With QYLD

2025-04-23 11:43:59 ET

Summary

• Since my last writings, the implied volatilities (IV) for both the NASDAQ and Russell indices have risen to quite extreme levels.
• This offers favorable pricing for both RYLD and QYLD’s use of options.
• The current IV is even more extreme for QYLD’s underlying index, judging by historical records.
• This makes QYLD even more attractive than RYLD as reflected in QYLD’s higher dividend yield - both compared to RYLD and its own historical averages.

QYLD and RYLD ETFs: previous thesis and new developments

I last analyzed the Global X NASDAQ 100 Covered Call ETF (NASDAQ: QYLD ) more than 2 months ago on 2-15-2025. That article was titled "QYLD Vs. SPYI: I Prefer QYLD For 2 Reasons" and performed a comparative analysis on QYLD. The analysis concluded with a buy rating on QYLD for the following reasons:

Since my last writings, the changes in implied volatility have been more in favor of SPYI than QYLD. However, I see more important factors that can counterbalance this and thus like QYLD better. In my consideration of these funds, their primary roles are A) to generate high-income net of fees, and B) to reduce the portfolio 's correlation with the overall market. QYLD is a better choice than SPYI on both fronts.

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