QQQY

[hilmy83]

To the options guys, maybe you can enlighten me a bit.

Help explain to me the downsides that I'm not aware of with this ETF.
https://www.defianceetfs.com/qqqy/

It's basically a 0DTE short put ETF (atm and 5% itm). They aim to have 0.25% daily gains, with about annual 50-60% distribution yield.

Their holdings from what I remember:

70% cash
under 30% treasuries
about 1-2% short nasdaq put

I understand the basics. But I want to figure out what the likelihood of NAV decay an investor would experience if they don't add anymore money in (but reinvesting the yield). Like what would usually happens if NDX drops 2-3% for 2-3 days?

Based on some scenarios (30 dte), it looks it can perform relatively decent.

 

[BeautifulStranger]

To the options guys, maybe you can enlighten me a bit.

Help explain to me the downsides that I'm not aware of with this ETF.
https://www.defianceetfs.com/qqqy/

It's basically a 0DTE short put ETF (atm and 5% itm). They aim to have 0.25% daily gains, with about annual 50-60% distribution yield.

Their holdings from what I remember:

70% cash
under 30% treasuries
about 1-2% short nasdaq put

I understand the basics. But I want to figure out what the likelihood of NAV decay an investor would experience if they don't add anymore money in (but reinvesting the yield). Like what would usually happens if NDX drops 2-3% for 2-3 days?

Based on some scenarios (30 dte), it looks it can perform relatively decent.

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Of course, selling 0DTE puts is not all free money. There is some risk yield premium for sellers, so likely a positive long term expectation. Probably little chance of blow up, but a really bad month may be possible. There are a lot of "Event" balls up in the air right now and VIX is a relatively modest 17 or so. Also, their fixed income investments are 3 and 14 months out, making maintaining interest income a challenge if rates start to drop. It would create interesting possibilities if there were options on QQQY. Perhaps a way to maximize returns would be to trade QQQY according to how you feel about VIX. Perhaps you might feel VIX is relatively high and expected to decline, such as when Summer approaches, etc.

 

[hilmy83]

Of course, selling 0DTE puts is not all free money. There is some risk yield premium for sellers, so likely a positive long term expectation. Probably little chance of blow up, but a really bad month may be possible. There are a lot of "Event" balls up in the air right now and VIX is a relatively modest 17 or so. Also, their fixed income investments are 3 and 14 months out, making maintaining interest income a challenge if rates start to drop. It would create interesting possibilities if there were options on QQQY. Perhaps a way to maximize returns would be to trade QQQY according to how you feel about VIX. Perhaps you might feel VIX is relatively high and expected to decline, such as when Summer approaches, etc.

Yes, absolutely there will always be a trade off. I know I'll be sacrificing growth for the premiums, but at the same time, I don't want it to be so underperformign the underlying benchmarks. I've tried all sorts of income based investments:

• dividend stocks (usually 3-4% yield)
• nonpublic reit (ex fundrise)
• collar etf like NUSI (their downside doesn't justify their income)
• atm call (QYLD) - no downside protection
• SVOL (currently in) - this actually has a "downside" protection with their very tiny otm call option against their short vix trades (which has doubled to 20% of their holdings now)
• QQQY - looks intereting, except again no downside, but insane potential premium.

What I don't like about SVOL is that it looks like they are averaging down the short vix positions (it was 10% of holdings, now 20%), and vix is not even at 20! Their vix call option size is still so small relative to the vix shorts. I think when vix spikes up, this etf is going to be MUCH worst off, plus you will end up eating up the loss in your capital. So this is like a daytrading etf, so I don't trust their skillsets to set up their vix positions properly. In fact, I wouldn't be surprised if these guys use shit like bollinger bands to figure out when to short the vix lol

 

[hilmy83]

QQQY first exdiv date today. I got in to test out the waters for this month. Will reinvest all distribution. if the 50-60% holds, then I can maybe use 30-40% of that as downside protection. Hell that's still good

 

[nitrene]

In 12 days they have a 5.6% dividend? That's pretty amazing.
Defiance S&P 500 put selling ETF JEPY has a 4.6% dividend in 9 days.

I think Defiance has one for Russell 2000 coming as well (I saw Jablonski on ETF Edge on CNBC).

 

[BeautifulStranger]

QQQY first exdiv date today. I got in to test out the waters for this month. Will reinvest all distribution. if the 50-60% holds, then I can maybe use 30-40% of that as downside protection. Hell that's still good

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With current volatility levels, I'll be doing something similar to QQQY. I will be buying bull spreads and actively scalping around the position as a hedge. Defined risk with a wide profit area and good potential daily returns. Who could ask for more?

 

[ph1l]

QQQY vs QQQ (both adjusted for dividends)

QQQY had higher returns since QQQY inception

and higher returns since the day before its ex-dividend date

 

[nitrene]

Yeah I've been monitoring the performance of JEPY & QQQY and they seem constantly perform better than the SPY & QQQ, respectively. What I don't understand is why?

If you're selling ATM 0DTE put options and the market goes down shouldn't you underperform? I thought put selling would benefit you in a long market. Maybe they are selling put spreads and not naked puts.

The recent dividend implies a 50bps daily outperformance.

 

[hilmy83]

I actually changed my mind about QQQY. Something about it jsut doesn't sit right with me. I decided to go with JEPQ for my yields play for now.