Global X NASDAQ-100 Covered Call ETF

QYLD

Market cap $8.32B

The Global X NASDAQ 100 Covered Call ETF (NYSEARCA:QYLD) has attracted income-seeking investors with its impressive 11% yield, but recent trends suggest retirees should approach this fund with caution.

Michigan-based Foguth Wealth Management sold 475,844 shares of QYLD in the fourth quarter for an estimated $8.28 million based on quarterly average pricing. The quarter-end position value decreased by $6.76 million, reflecting both share sales and price movement.

Current market valuations are near dot-com bubble highs, especially in AI leaders, where the P/S are just extreme. The fact that we have entered 2026 with an active 3-year bull run does not help either. However, we have to be also mindful of the risk that comes with such a thinking - i.e., the risk of incurring painful opportunity cost.

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Covered call ETFs promise high income and outperformance in sideways or declining markets, but face opportunity cost in bull markets. Despite strong AuM growth and new launches like NEOS MLP & Energy Infrastructure High Income ETF (MLPI), Covered Call ETFs are structurally suboptimal with inherent negative alpha. Covered call ETFs consistently underperform not only in rising markets due to capped upside, but also during market declines.

AI bubble worries are rising, and market volatility is picking up. These short-term ETF strategies aim to hedge risk while staying invested.

Global X Covered Call ETF (QYLD) delivers reliable double-digit income but lags peers in total return and capital appreciation. QYLD's strategy of selling covered calls systematically caps upside, making recovery after market downturns difficult and limiting long-term capital growth. Competing ETFs like QQQI and GPIQ now offer higher yields and better appreciation, eroding QYLD's market share and appeal.

Global X Nasdaq 100 Covered Call ETF (NASDAQ:QYLD) transforms the Nasdaq-100's top technology stocks into an 11% monthly dividend by selling

This week is an important one for consumers and investors alike. The Federal Reserve is sitting down for its final policy meeting of the year.

High-yield CEFs and covered call ETFs lure in investors with juicy yields. However, there are several hidden dangers lurking beneath the surface of many of these funds. There is a better way to generate high-yielding passive income and potential long-term total return outperformance.