ProShares Nasdaq-100 High Income ETF

IQQQ

Market cap $308M

IQQQ offers a 10.7% yield via a daily covered call strategy on the NDX, using swaps for implementation. IQQQ's yield is stable and tax-efficient, but dividend payouts fluctuate and NAV growth is modest, relying on underlying index appreciation. IQQQ underperforms in flat and volatile markets, showing no clear advantage over peers like JEPQ, QQQI, or QDTE in total return or downside protection.

While the market seemingly features no shortage of headline-driving news, one of the most consequential developments stemmed from the Federal Reserve. In September, the central bank cut its benchmark interest rate by 25 basis points, making good on a widely expected move.

The ProShares Nasdaq-100 High Income ETF offers high income and growth potential through covered calls on AI-driven tech stocks. IQQQ provides heavy exposure to the Magnificent 7, especially NVDA, MSFT, and AAPL, with a strong tech and AI focus. The ETF boasts an 11.4% yield and has out-performed rivals like JEPQ and QYLD in NAV and total return since its inception.

I maintain a hold rating on IQQQ due to its underwhelming performance versus peers and inconsistent dividend payouts. IQQQ offers high income via a daily covered call strategy using swap agreements, but this limits long-term growth potential. Peers like QQQI and GPIQ provide better total returns or capital appreciation, making them more compelling for income or growth investors.

ProShares Nasdaq-100 High Income ETF offers income-focused Nasdaq-100 exposure through a covered call option strategy. Its performance hasn't deviated significantly from that of vanilla index-tracking funds, but it has slightly underperformed due to the upside cap placed by call underwriting. Given current risks, it can also work as a defensive option as it is likely to outperform the market in the near term given important macro headwinds.

IQQQ offers high income (15.66% yield) by tracking the Nasdaq 100 with a daily covered call strategy, balancing income and tech exposure. Top holdings—Microsoft, Nvidia, and Apple—are leaders in AI and innovation, driving long-term growth potential for the fund. Covered call strategy provides steady income and downside cushion, but caps upside in strong bull markets; careful management is crucial.

BETHESDA, Md.--(BUSINESS WIRE)--ProShares announces that its suite of High Income ETFs has surpassed $1 billion in assets under management.

I rate IQQQ as a hold due to its short operating history and underperformance compared to some peer option ETFs like QQQI and GPIQ. IQQQ offers a high starting dividend yield of 10%, but its inconsistent payouts limit its appeal as a reliable income source. The fund's strategy involves exposure to Nasdaq-100 constituents and daily call options via swap agreements, aligning with tech sector growth.

A potentially fruitful stock options strategy known as writing covered calls can be performed on stocks you own to collect additional income during every options expiration period. It can be lucrative to compound the gains.

QDTE and IQQQ are both funds launched in March 2024 that use daily covered calls on the NASDAQ 100 to generate income. IQQQ's strategy is more passive and offers a good balance of capital appreciation and income for a conservative investor. QDTE's strategy is active and more aggressive which has caused NAV erosion.