"Acknowledging that the entire Nasdaq 100 index carries a multiplied level of volatility, QQQX mitigates a sizable percentage of this volatility with its covered call strategy, which is underwritten against 35-75% of the portfolio at any given time, based on the portfolio manager's discretion. On the plus side, this results in ample call option underwriting premiums that supply the fuel for QQQX dividends, which equate to a yield of 8.23% as of market price at the time of this writing."
"The Nasdaq 100 Index is a popular stock index of Nasdaq listed stocks. It has gained increased attention due to the Magnificent 7 stocks (Amazon, Apple, Alphabet (Google), Microsoft, Meta Platforms (Facebook), Nvidia, and Tesla) all being listed on Nasdaq. However, unlike with the S&P 500, few of the stodgier banking, insurance, and defensive companies trade on Nasdaq, thus making the Nasdaq 100 more aggressively weighted towards technology."
Covered-call ETFs and CEFs originated in 2004 with BlackRock's Enhanced Capital and Income Fund, and Nuveen launched QQQX in 2007. The Nasdaq 100 is heavily technology-weighted, driven by the Magnificent 7, and lacks many traditional defensive financial firms found in the S&P 500, producing higher volatility alongside greater long-term growth potential. QQQX implements a covered-call overlay on roughly 35–75% of the portfolio at manager discretion to harvest option premiums. Those premiums fund elevated dividend distributions (8.23% yield at market price at the time) while the call overlay limits upside participation relative to the underlying index.
Read at 24/7 Wall St.
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