Latest news with #NVDY
Forbes
6 days ago
- Business
- Forbes
NVDA Vs. NVDY: The Better Nvidia Stock Buy For Your Investing Style
Nvidia is the crown jewel of the AI boom. But how you choose to invest in it, either directly through NVDA stock or indirectly via the NVDY covered call income ETF, reflects your risk appetite, time horizon and definition of returns. This article explores which option (NVDA stock vs. NVDY) is a better fit for your portfolio and what your choice reveals about your investor persona. What Is YieldMax's NVDY? The YieldMax NVDA Option Income Strategy ETF (NVDY) is an actively managed fund that does not invest directly in Nvidia shares, but delivers a far higher income yield vs. NVDA. The fund's staggering trailing twelve-month (TTM) distribution yield of nearly 80% stems from a unique strategy that generates monthly income through options without actually owning NVDA stock. To achieve this, NVDY implements a 'synthetic covered call' strategy by which it To generate monthly income by selling short-term covered calls, NVDY first needs a long exposure to NVDA stock. Rather than buying NVDA shares outright, NVDY creates a cheaper, synthetic long position by This combo allows NVDY to simulate NVDA stock's price moves, without actually buying the stock. These call and put options typically have durations of one to six months and strike prices near NVDA's current price at the time these option contracts are executed. The synthetic long position provides NVDY with exposure that is nearly identical to owning NVDA stock. If NVDA rises, the call gains in value and if NVDA falls, the put incurs a loss. If NVDA stays flat, typically both options may expire worthless, and the fund may lose the cost of the call, but this will be offset by the premium received from the short put. Suppose NVDA stock is currently trading at $200/share. NVDY buys a call option with a strike price of $200 (at-the-money) by paying a premium of $15. (Premiums vary depending on volatility and expiration, and the $15 figures here are for illustrative purposes.) This gives NVDY the right to buy NVDA at $200. If NVDA rises to $250, the call option's value would increase to $50. Subtracting the $15 premium paid, the net profit on the call is $35. As part of the synthetic strategy, NVDY also sells a put option with a $200 strike price, receiving a $15 premium. This gives it the obligation to buy NVDA at $200 if the price falls below that level. If NVDA drops to $150, NVDY is forced to buy at $200, incurring a $50 loss on the put. After subtracting the $15 premium received, the net loss is $35. These call and put options together form a synthetic long position, mimicking the payoff of directly owning the stock. Although synthetic ownership is more complex than buying shares directly, it is significantly more capital-efficient. For example, buying 100 shares of NVDA at $200 each would require $20,000 upfront. A synthetic long position created by buying a call and selling a put at the same $200 strike can replicate this exposure. If the premiums for both options are around $15 each, the net upfront premium may be close to zero. Since each options contract typically represents 100 shares, this setup simulates $20,000 of stock exposure with little or no net premium paid. However, this does not mean the position is free. The short put side of the trade introduces significant downside risk and typically requires substantial margin or collateral. While the strategy uses less capital than directly purchasing the stock, margin requirements and potential losses can be huge. This is an oversimplified example meant to illustrate the concept of capital efficiency. In practice, actual capital requirements and risk exposure will vary depending on market conditions and brokerage policies. Investors don't need to worry about this nitty-gritty, NVDY fund managers will handle the complexities. NVDY then sells calls against this synthetic long position to generate income from premiums. These call options are typically short-term (expiring within one month or less) and are written at strike prices 0–15% above NVDA's current price at the time. If NVDA's price goes up, NVDY makes gains up to the strike price, but anything above that is capped, because the fund sold away that upside in exchange for income. If NVDA stays flat or dips slightly, NVDY retains the premium from selling the call options. This is its main source of monthly income. NVDY also holds short-term U.S. Treasuries that not only serve as collateral for the options in connection with its synthetic covered call strategy, but also earn some interest. NVDY also employs a 'Covered Call Spread' strategy—a more nuanced variation of the traditional covered call—used when it anticipates a sharp short-term rise in NVDA's price or when market conditions make spreads more advantageous than outright calls. In this strategy, NVDY sells a call option while simultaneously buying a call option with a higher strike price but the same expiration date. This approach still generates income and, if NVDA's price surges, allows NVDY to participate in more upside than a regular covered call would. How Does NVDY Differ From NVDA Stock? NVDA stock and NVDY are both Nvidia-focused investments but serve different goals: NVDA stock is regarded as a growth superstar, while NVDY is designed as a tactical income generator. For NVDA investors, gains and losses move in lockstep with the stock price. But, NVDY's returns, shaped by its synthetic long structure, follow a more complicated path. So, we notice that drawdowns are more or less similar for NVDA and NVDY, but gains are capped for NVDY. So, why invest in NVDY at all? Because of the outsized income yield from NVDY that far surpasses NVDA's. NVDY pays varying monthly distributions, while NVDA pays a penny in quarterly dividends. On a TTM basis, NVDY has paid distributions totaling $14.04/share, equating to 78.7% distribution yield based on NVDY's last closing price of $17.85. This far surpasses NVDA's 0.02% forward yield or annual payout of 4 cents/share on a forward basis. Price performance and Total Returns (including dividends/distributions): Even with NVDY's hefty monthly distributions, NVDA has delivered stronger total returns. NVDY's monthly payouts are a mix of return of capital (ROC) and ordinary income (such as option premiums and interest from Treasuries) For example: Why this breakdown matters: Return of capital isn't taxed when received. Instead, it reduces your cost basis in the ETF, which can increase taxable capital gains when you sell. Illustration: Once your cost basis is reduced to zero, any further ROC distributions are treated entirely as capital gains for tax purposes. The income portion of the payout, however, is taxable in the year received. For July, this would mean the remaining 63% of the distribution was taxable income. Expense Ratio: YieldMax lists NVDY's gross expense ratio as 0.99%, while many third-party sites like Yahoo Finance report the net expense ratio as 1.27%. That means an investor pays $127 annually for every $10,000 invested in NVDY. Let's say an investor bought 1,000 shares of NVDY a year ago at around $24/share: Even after accounting for the $304.80 annual fee (1.27% of $24,000), the net income is still exceptionally high. In other words, the expense ratio barely dents NVDY's income advantage. Since its inception on May 10, 2023, when it was trading around $20, NVDY has paid out $32.71 in distributions. Investors who purchased one share at launch would have recovered their full initial investment and realized an additional $12.71 in income. It is important to note that NVDY shareholders do not receive any dividends paid by Nvidia (NVDA) directly. But with these juicy payouts from NVDY, no investor would have missed much. When it comes to NVDA, the math is simple. You'll need about 10× the cost of an NVDY share to buy one share of NVDA. Sell NVDA in a taxable account, and you'll owe capital gains taxes on your profits. Sell it in a tax-advantaged account like a 401(k), and those taxes can be pushed to another day. NVDY Vs. NVDA: Advantages And Risks Lower Entry Cost: NVDY trades at roughly one-tenth the price of NVDA stock, making it more accessible for smaller investors. Capital Efficiency: Through its synthetic long position strategy, NVDY can mimic exposure to thousands of dollars' worth of NVDA stock with a minimal capital outlay. Attractive Yields - NVDY's covered call strategy generates eye-catching yields, appealing to income-focused investors. NVDA on the other hand is coveted for its growth potential rather than dividends. Faster Capital Recovery: NVDY's hefty and frequent payouts can help investors achieve 'house money' status quickly, recovering their initial investment through distributions. This can substantially de-risk the investment. NVDA requires selling shares to realize profits. Occasional Upside Participation: when NVDA stock is expected to rally in the short-term (because of a sell-off or some positive development) NVDY employs the 'Covered Call Spread' strategy, allowing more upside capture versus a standard covered call if NVDA's price surges. Asymmetric Downside: NVDY's synthetic long structure caps upside but leaves investors fully exposed to NVDA's downside. High monthly income may not be able to offset losses from a sharp NVDA correction. Investor Exodus: Significant price drops in NVDY can trigger investor outflows, lowering Assets Under Management (AUM) and making it harder to generate option income efficiently, thereby creating a negative feedback loop. Distribution volatility: While NVDA offers paltry dividends, NVDY's monthly payouts can fluctuate sharply — largely because they rely on option premium income and include return of capital. When NVDA's implied volatility drops or NVDY's Net Asset Value (NAV) erodes from repeated ROC payouts, the ETF's distributions could shrink. Opportunity Cost: Historically NVDA's returns have outpaced NVDY's significantly. Simply holding NVDA stock may generate greater total returns than NVDY, especially during strong bull runs in tech. NVDA Or NVDY — Which Investor Are You? If you are betting on Nvidia as a core pillar of an AI-driven future, and seek full participation in Nvidia's growth story — you're a Growth Chaser — you pick NVDA stock. If you are comfortable with capped upside and prioritize monthly income, you're an Income Alchemist — you choose NVDY to tactically monetize volatility and generate consistent yield. If you are looking to blend growth and income — gaining exposure to Nvidia's long-term upside while securing a steady income stream, you hold both: NVDA for capital appreciation and NVDY for monthly payouts. That makes you the Hedged Optimist. Bottom Line In my view, NVDA stock remains the superior play with its compelling long-term returns despite the meager dividend. The NVDA stock has clearly demonstrated resilience by rebounding and reaching new heights after every sharp correction, highlighting its structural strength. On the other hand, NVDY's low capital requirements, exceptional yield and the potential to recover capital in a reasonable time frame are alluring. However, the risks of asymmetric downside and NAV erosion — potentially shrinking the very dividends investors seek — make NVDY better suited as a tactical, smaller allocation in a portfolio. By contrast, NVDA stock deserves to be a core holding and investors may consider accumulating on any weakness, although past performance is no guarantee for future results.
Yahoo
30-04-2025
- Business
- Yahoo
Dividend Investor Who Earned $18,000 a Month Despite 'Bloody' Selloff Shares His Top 6 Stock Picks
Defensive equities and safe-haven assets are gaining attention as recession warnings grow louder. JPMorgan Chase (NYSE:JPM) now believes there's a 60% chance that the world and US economy will face recession, up from its prior estimate of 40%. Dividend stocks are gaining appeal given their strong track record during market downturns. Don't Miss: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are using retirement income calculators to check if they're on pace — Last month, an investor shared his detailed income report and progress on Reddit, and talked about the impact of the recent market volatility on his portfolio. The portfolio screenshots shared by the investor showed his dividend income in March stood at roughly $18,000, compared with $24,000 for February and $21,360 for January. The investor said he was aiming to reach $30,000 in monthly dividend income but was brought down to the "$10K club" due to the "bloody" March selloff. "Not sure when the recession of US economy is coming but pretty sure there is a recession in my monthly dividend income. It only takes one month to destroy a fully bull market, how amazing is that?" he said. The S&P 500 and the Nasdaq saw their biggest monthly percentage declines in March since December 2022 amid market uncertainty due to President Donald Trump's planned tariffs. Trending: It's no wonder Jeff Bezos holds over $250 million in art — The investor shared a week-by-week breakdown of his dividend income and portfolio holdings for March. Let's take a look at some of his key holdings that contributed to his overall income during the month. YieldMax COIN Option Income Strategy ETF YieldMax COIN Option Income Strategy ETF (NYSE:CONY) was among the top holdings of the investor who made about $18,000 in dividends in March. He had 5,500 shares of the fund in his portfolio in the first week of the month. The fund makes money by selling call options on Coinbase Global (NASDAQ:COIN). CONY has lost about 38% in value in 2025 through April 25. YieldMax MSTR Option Income Strategy ETF The YieldMax MSTR Option Income Strategy ETF (NYSE:MSTY) generates income by selling call options on MicroStrategy (NASDAQ:MSTR) stock. It's been a wild ride for MSTY investors this year amid a decline in Bitcoin price. The fund is down about 13% through April 25. The investor had 4,000 shares of the fund in his portfolio during the second week of March. YieldMax NVDA Option Income Strategy ETF YieldMax NVDA Option Income Strategy ETF (NYSE:NVDY) makes money by selling call options on Nvidia (NASDAQ:NVDA). The investor had 3,820 shares of the fund. NVDY fell 40% this year amid a decline in Nvidia shares, which are down 20% so far this TSLA Option Income Strategy ETF YieldMax TSLA Option Income Strategy ETF (NYSE:TSLY) is a popular dividend ETF for income investors seeking high yields. With a distribution rate of 104%, TSLY generates income by selling call options on Tesla (NASDAQ:TSLA) shares. TSLY is down 38% this year. The investor had 1,842 TSLY shares in his portfolio. YieldMax Universe Fund of Option Income ETFs The YieldMax Universe Fund of Option Income ETFs (NYSE:YMAX) has multiple ETFs in its portfolio that implement options strategies to generate income. The investor had about 855 shares of YMAX in his portfolio as of the last week of March. Roundhill Innov-100 0DTE Covered Call ETF Roundhill Innov-100 0DTE Covered Call ETF (CBOE: QDTE) generates income via a zero-day-to-expiration options strategy on the Roundhill Innovate Index. This strategy involves selling call options that expire the same day. Read Next:Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Dividend Investor Who Earned $18,000 a Month Despite 'Bloody' Selloff Shares His Top 6 Stock Picks originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
14-02-2025
- Business
- Yahoo
Dividend Investor Earning $20,000 a Month Shares His 7 High-Yield Stock Picks – 'You Just Need to Start'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Dividend investing has long rewarded patient investors. Data shows that from 1998 to 2018, high-yield dividend stocks posted a compound annual return of 8.8%, compared with 6.6% for non-dividend companies. In May last year, someone asked income investors on Reddit to share their monthly dividend income goals. Many investors shared their current income and long-term goals, but one comment caught attention. An investor said he made about $20,000 a month in dividends and aimed to take this income to $30,000. In several comments on different posts on the social media platform, the investor advised others to start investing as soon as possible. Don't Miss: If there was a new fund backed by Jeff Bezos offering a ? Commercial real estate has historically outperformed the stock market, and "You just need to start, add where you can, re-invest divs and give it time. Consistency & patience is the key," he said. However, most of the investor's portfolio consisted of high-yield and risky covered call ETFs. Based on the information he shared publicly on Reddit, let's examine his portfolio holdings. YieldMax COIN Option Income Strategy ETF YieldMax COIN Option Income Strategy ETF (NYSE:CONY) was among the investor's largest holdings. The fund makes money by selling call options on Coinbase Global (NASDAQ:COIN). CONY is a risky investment since its upside potential is capped due to the covered call strategy, and its performance is linked to a single company operating in the volatile crypto industry. The fund has a distribution rate of 110% and pays monthly. CONY is down 42% over the past 12 months. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — YieldMax MSTR Option Income Strategy ETF The YieldMax MSTR Option Income Strategy ETF (NYSE:MSTY) generates income by selling call options on MicroStrategy (NASDAQ:MSTR) stock. Its distribution rate is about 108%. The investor seemed highly bullish on the fund and said in various social media posts that he had fully recouped his investment in MSTY. "I bought MSTY at inception and it paid off in 10 months. I use my divs to accumulate more shares and generate higher divs. If you need to create income, then join the party and disregard all the naysayers who can't wrap their little heads around new investment vehicles," he said in a comment. YieldMax NVDA Option Income Strategy ETF YieldMax NVDA Option Income Strategy ETF (NYSE:NVDY) makes money by selling call options on Nvidia (NASDAQ:NVDA). Recently, the ETF has gained popularity amid the buzz around Nvidia. The fund has a distribution rate of about 52%. NVDY suits investors who believe in Nvidia's long-term potential but want to hedge against possible declines in the chipmaker's shares. The Redditor said his investment in the fund has already paid for itself. "NVDY has turned into a nice steady payer. When I first entered it paid $2+ multiple times," he said a few days ago. The YieldMax SMCI Option Income Strategy ETF The YieldMax SMCI Option Income Strategy ETF (NYSE:SMCY) generates income by selling call options on Super Micro Computer Inc (NASDAQ:SMCI). The fund has a distribution rate of about 86%.Roundhill Small Cap 0DTE Covered Call Strategy ETF The Roundhill Small Cap 0DTE Covered Call Strategy ETF (BATS:RDTE) generates income by holding small-cap stocks and selling call options with zero expiration days. Its distribution rate is 27%. YieldMax MARA Option Income Strategy ETF The YieldMax MARA Option Income Strategy ETF (NYSE:MARO) generates monthly income by selling call options on crypto mining company MARA Holdings Inc (NASDAQ:MARA). The fund has a distribution rate of about 82%. Its value has been down 29% over the past 12 months. REX AI Equity Premium Income ETF The REX AI Equity Premium Income ETF (NASDAQ:AIPI) invests in top AI companies and generates income by selling call options on stocks. Some of the fund's top holdings include Palantir (NASDAQ:PLTR), CrowdStrike (NASDAQ:CRWD), ARM (NASDAQ:ARM), Nvidia (NASDAQ:NVDA), Meta Platforms (NASDAQ:META), Qualcomm (NASDAQ:QCOM) and Alphabet (NASDAQ:GOOG). Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. to decide which one is right for you. Lower interest rates mean some investments won't yield what they did in months past, but you don't have to lose those gains. Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities. , which provides access to a pool of short-term loans backed by residential real estate. The best part? Unlike other private credit funds, Looking for fractional real estate investment opportunities? The features the latest offerings. This article Dividend Investor Earning $20,000 a Month Shares His 7 High-Yield Stock Picks – 'You Just Need to Start' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
31-01-2025
- Business
- Yahoo
77-Year-Old Dividend Investor Earning $270,000 a Year Shares Top 6 Stock Picks – 'I Now Sleep Much Better at Night'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Dividend stocks are in focus as concerns for a higher-for-longer interest rate scenario rise and investors turn to stable companies to offset potential volatility. Dividend stocks also perform well when interest rates are going down. Ed Clissold, Chief U.S. Strategist at Ned Davis Research, said on CNBC a few months back that dividend stocks outperforming non-dividend-paying companies during the Fed's easing cycles has been a "pretty consistent" trend over the past few decades. But which dividend stocks can help you reach a stable and significant income? Let's see a case study for ideas. Don't Miss: Unlock the hidden potential of commercial real estate — CEO of Integris gathered a team of senior investment managers who have $34.22 billion in combined owned and managed assets in the West Coast — Last week, someone asked old, experienced dividend investors for investment advice and ways to reduce tax liabilities and risks during income investing on r/Dividends, a Reddit discussion forum with over 660,000 followers. The post received over 90 comments, with many investors sharing their success stories and advice. An investor said he had 50 years of experience in stock investing and shifted to dividend income about five years ago. He, 77, revealed in a separate comment that he raked in about $270,000 in retirement income. "I now love actively managing my nest egg portfolio and sleep much better at night. I believe investment return, risk mitigation and minimal tax's are directly proportional to investment knowledge and experience. Five years ago I was yielding about 8% with COVID discounted preferred dividend stocks. They appreciated and B grade or higher have not yielded 8% for several years so, researched other dividend stocks," he said. Trending: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Let's discuss some of his portfolio's notable dividend stocks and funds. YieldMax NVDA Option Income Strategy ETF The 77-year-old retired investor said he had YieldMax NVDA Option Income Strategy ETF (NVDY) in his portfolio "for fun." He recommended the ETF to Redditors who have a higher risk appetite. "I am doing a test investment with NVDY to learn more about YieldMax, their trading strategy and technology. Hoping for some longevity and no decay, not just short term speculation worries. NVDY is about the longest offering of their funds at two years, with the most assets at $1.3B," he said in a separate comment. YieldMax NVDA Option Income Strategy ETF (NVDY) makes money by selling call options on Nvidia. Recently, the ETF has gained popularity amid the buzz around Nvidia. The fund has a distribution rate of about 52%. NVDY suits investors who believe in Nvidia's long-term potential but want to hedge against possible declines in the chipmaker's shares. Altria Altria (MO) was a high-yield stock in the portfolio of the investor who collected about $270,000 a year in retirement income. Altria has a 7.8% dividend yield and over 50 years of consecutive payout increases. Last month, Bank of America increased its price target on the stock to $65 from $55. The firm believes lower corporate taxes, tariffs and tighter border controls under the new U.S. administration could bode well for the tobacco company. JPMorgan Nasdaq Equity Premium Income ETF The investor said he was "very happy" with his dividend ETFs, including the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is a covered call ETF that distributes monthly dividend income. It invests in Nasdaq companies and generates extra income by selling call options. The fund has a dividend yield of more than 9%. In the December quarter, the JPMorgan Nasdaq Equity Premium Income ETF outperformed its benchmark, the Nasdaq 100 S&P 500 High Income ETF NEOS S&P 500 High Income ETF (SPYI) is a high-yield covered call ETF that pays monthly dividend income. It invests in some of the top S&P 500 companies and generates extra income by selling call options on stocks, generating extra premium income for shareholders. SPYI has a dividend yield of over 12%. Some of SPYI's biggest holdings include Apple, Nvidia, Microsoft, Amazon, Meta Platforms, Tesla, Alphabet and Broadcom. Guggenheim Strategic Opportunities Fund Guggenheim Strategic Opportunities Fund (GOF) exposes investors to fixed-income and debt securities. It invests in various credit instruments, including corporate bonds, asset-backed securities, mortgage-backed securities and other high-yield debt. However, it's a risky investment because it invests in ungraded bonds, also known as junk bonds. Cornerstone Strategic Investment Fund Cornerstone Strategic Investment Fund, Inc. (CLM) is a closed-end management investment company that seeks capital appreciation through investment in U.S. and non-U.S. stocks. The fund has a dividend yield of 16%. Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. to decide which one is right for you. The changing interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks... Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. For instance, the from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. . Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings. This article 77-Year-Old Dividend Investor Earning $270,000 a Year Shares Top 6 Stock Picks – 'I Now Sleep Much Better at Night' originally appeared on
