NEOS Adds Nasdaq-100 Options Income ETF | ETF Trends

This week, NEOS ETFs rolled out the NEOS Nasdaq 100 High Income ETF (QQQI). The fund pairs exposure to a major index with a complementary options strategy intended to provide investors with monthly income.

QQQI lists on the Nasdaq stock exchange and has an expense ratio of 0.68%.

“We’re proud to expand our equity high income ETF lineup with [QQQI]. Our largest ETF, the NEOS S&P 500 High Income ETF (SPYI) also sits in that lineup and has been very well received in the marketplace due to its track record of delivering a high level of tax efficient monthly income and strong total returns since its inception back in August of 2022. QQQI aims to offer those same benefits with exposure to the Nasdaq-100 Index, giving our investors more options to meet their income needs,” said NEOS Co-Founder and Managing Partner Garrett Paolella.

An Options Income Strategy Based on the Nasdaq-100

The actively managed fund holds the constituents of the Nasdaq-100 Index and sells NDX call options. The premiums from the options enable the fund to make monthly distributions. SPYI currently offers a distribution yield of 12.09%. However, the Nasdaq-100 Index has historically had a higher volatility profile than the S&P 500 Index. Typically, higher volatility can lead to greater premiums generated from option writing.

As with other NEOS ETFs, the options in QQQI’s portfolio qualify as “Section 1256 Contracts.” As such, they receive tax-advantaged treatment relative to other types of options contracts. This is the first of NEOS’ funds to use options on the Nasdaq-100 rather than options on the S&P 500 Index.

NEOS prioritizes income with its options strategies. The launch of QQQI brings the firm’s total number of income-focused funds to four, including the $683 million SPYI.

The options strategy deployed by NEOS allows investors to get exposure to one of the world’s best-known indexes while also receiving regular distributions.

For more news, information, and analysis, visit the Tax-Efficient Income Channel.