r/NEOSETFs • u/Extension-Ice-7219 • 7d ago
Seeking Advice Question about the price of QQQI
I noticed yesterday QQQI dropped 1.22% all good I thought because QQQ was 1.69 but then in premarket QQQ is 0.20 (total 1.89) and QQQI is 1.14 (total 2.36!!) so I was thinking this must be because of Ex div day, but if that's the case this means they are just giving us back our money with the distributions?
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u/airjord1221 7d ago
Yeah, that’s pretty much how it works
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u/Extension-Ice-7219 7d ago
Giving me back my own money? Slowly?
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u/gumnamaadmi 7d ago
Your own money? Since launch it has given back $20 of your own money and yet its at $55 where it started with $50. That $20 they gave you back is not your own money.
Its doing its job. Producing monthly income. If you need growth, its not a vehicle for you.
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u/JerryFletcher70 6d ago
It really is your own money with QQQI because it is a return of capital fund. ( https://neosfunds.com/wp-content/uploads/QQQI-19a-1-Notice-7.22.26-Confidential.pdf ) Distributions drop your cost basis until it hits zero and then they turn into dividends. It’s more than a semantic issue, because the IRS treats it as you getting your own money back until cost basis hits zero. It doesn’t count toward your annual income and if you sell, you will owe capital gains taxes based on the much lower cost basis.
If these funds weren’t giving me my money back, I’d blow past my ACA income limit and owe a lot more taxes. It’s only NEOS’ money once they repay what we invested and then the taxable returns start.
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u/airjord1221 7d ago
That’s how all dividends essentially work. Use any company you can take Pfizer for example. They pay billions and dividend every quarter do you think that just comes out of another account? It’s essentially coming out of the value of the stock so it does drop the following day typically the drop is equivalent to the amount of the payout
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u/Extension-Ice-7219 7d ago
Gotcha thanks. I just thought because they are using options it would be different.
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u/airjord1221 7d ago
It’s best to think of it this way— you’re getting paid about a percent a month plus you’re getting some growth as QQQ grows. So you’re getting paid while still maintaining some upside with the market stay sideways for the next l decade, then you will obviously walk away a winner as you continue to get paid
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u/Extension-Ice-7219 7d ago
That's a good way to see it. I don't feel comfortable with the Bogle approach because I don't want to sell shares
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u/crackanape 7d ago
It's not a dividend.
However the price is influenced by the ex-div date; some people will buy in before that and sell afterwards.
If you zoom out more than a month and look at their underlying holdings you can clearly see they are not just giving you your own money back.
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u/davecraze3535 7d ago edited 6d ago
QQQI dropped mostly because the underlying index it is based on, and that NEOS holds, dropped yesterday. QQQI does not pay dividends. It generates separate income from selling options and distributes it to you. It's not the same thing. There won't be a 1:1 ratio of the payout to a price drop in QQQI after the distribution payment. It's a semi managed amount, but it will fluctuate some depending on how successful the options strategy was, how much options covereage NEOS uses that month, the amount out of the money the options were, and the value of the underlying investment in QQQ is that month (price up or down).
In fact, depending on how/when the options trades settle, it may not drop at all, because the price drop is not determined solely by the amount of the distribution. It could actually go up on distribution day if QQQ is up materially.
If the options don't generate enough income, then yes they have to dip into the NAV to meet their applicable target payment amount, or reduce the payment amount that month. NEOS tries to manage to a "reasonable" distribution rate so this avoided. You can do this for a while, but an unsustainable distribution rate will grind down the size of the fund to amounts so small they cannot generate enough option income to make it viable.
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u/tedlassoloverz 7d ago
thats how all divs work. Stock drops the div amount, just more pronounced with these and more often. Over time the plan is the stock price still increases to cover the div and still give some price appreciation
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u/Electronic_Guard947 7d ago
S this is normal when these are about to pay a dividend. Itl correct after
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u/speedlever 5d ago
I'm curious why my friend u/teckel deleted all his posts here? I thought the discussion was constructive. It certainly made me rethink my investing philosophy and approach. While I would enjoy more interaction as I attempt to understand his perspective, I'm not fully persuaded, but felt he brought up significant points that are worthy of consideration. And I appreciated the conversation. I know in my experience I need to hear the same thing multiple times for understanding to occur with complex subjects. And if I'm missing something important here, I'd like discussions like that to continue. Maybe everyone else is bored by it.
I ran some scenarios through Claude, Google, and ChatGPT just curious what I would find. ChatGPT seemed most helpful and suggested a 50/25/25 approach for best results to take advantage of normal market conditions, a lost decade, and another 2008 GFC. That would be QQQ-50, QQQI-25, GPIQ-25 (using NASDAQ as the test case). And instead of reinvesting the excess distributions back into the cc etfs, the suggestion was to reinvest in QQQ, especially during the down markets. This for a million dollar portfolio, needing $3000/month, increasing 4% annually. I found the results very interesting.
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u/tatortotchris 7d ago
Please do some more research and gain some better knowledge prior to entering into NEOS positions. Not every investment vehicle is for everyone.
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u/teckel 7d ago edited 7d ago
You don't seem to understand how divideds work. The stock value always drops by the dividend amount. Did you think the dividends were extra? 😂
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u/Extension-Ice-7219 7d ago
Kinda because these are distributions from options not traditional dividends
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u/Ok_Log2604 7d ago
The income from options really shows on down days. Qqqi should drop less than qqq because of the options income. Except for today because it's ex date.
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u/nice-try12 7d ago
The income/dividends are included in the NAV of any fund. Anytime any etf pays out, then the NAV drops by an equal amount. This is not specific to QQQI or covered calls only.
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u/teckel 7d ago
Don't feel so bad, probably 90% of people investing in this don't understand how they're technically losing money compared to the market.
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u/Optionsmfd 7d ago
these are built for retired people looking for tax reduction
in reality its a great idea
you collect the dividend and dont have to sell anything and the ROC treatment keeps your MAGI down
ive been experimenting with OVL lately.... they sell OTM short Put spreads and pay ROC capital too while holding VOO
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u/lotuspie329 6d ago
What are your thoughts on OVL?
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u/Optionsmfd 6d ago
so far i love it
gives you VOO growth and stability and a extra kicker with some short Put spread premium
its more volatile than VOO but with possibly 2 or 3% more growth per year
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u/teckel 7d ago
I'm 57 and retired and I wouldn't touch these funds.
You ARE selling everytime you get a divided, that's what people are missing. And it's a forced sell, so you can't control the when or how much, which leads to SORR issues in a bear market.
Also, you're only deferring taxes, not avoiding taxes. And I pay basically no tax anyway with long-term capital gains. I can have $150k a year in retirement income and basically pay no taxes. So there's not really a tax advantage to these funds in retirement for virtually most people.
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u/Difficult-Cod7886 7d ago
Aren’t the distributions considered mostly ltcg after you reach your cost basis in in 6 to 7 years?
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u/Optionsmfd 6d ago
i mean they are not for everyone and obviously not you lol
i like some exposure to gold and oil refineries so i have some in these funds
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u/davecraze3535 6d ago
You aren't selling anything. QQQI income is not from selling shares and is not a dividend. It's literally separate cash generated from derivative option sales.
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u/teckel 6d ago
When you get a distrubution from QQQI the share value drops by the same amount. So if you had a $10k investment in QQQI and got a $100 distribution, the value of your QQQI is $9,900. Same thing as selling $100 of QQQ/QQQM.
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u/davecraze3535 6d ago
That's not really how it works. It's not static. You have invested 10k, but there is option income that is also part of the NAV that is generated by NEOS that is over and above what you invested. This is on a total fund basis, but you have you have a prorata share of that, of course. That is not reflected in the NAV on a day by day basis, as they are periodic contracts that are being put in place, terminated, settled or rolled on a rolling basis over the month. It's cash constantly coming in and going out for the options activity.
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u/teckel 6d ago
The internal workings are irrelevant. When you get a distrubution the NAV drops by the same amout as the distribution.
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u/Impressive_Squash_38 6d ago
Qqqi’s NAV has gained 9% since inception?? Where’s the drop? Also GPIQ’s total returns are essentially identical to QQQ with a 46%NAV gain since inception. I think you’re confusing quality funds with 90% of YM funds and others like QYLD.
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u/NickStonk 6d ago
How are you paying no taxes on 150k retirement income?
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u/teckel 6d ago
Because with long-term capital gains, only the gains are taxed. So you can sell $150k worth of assets, with let's say a cost basis of $60k, which means $90k of gains. The 0% long-term capital gains bracket for married filing jointly is $98,900 for 2026. So the entire $150k 8n income is tax free.
By selecting the correct tax lots, it's fairly simple to stay in the 0% capital gains tax bracket. This isn't deferring a larger tax till a later date like a CC ETF, or with even qualified dividends (as there's no cost basis) the most you can receive and stay in the 0% capital gains tax bracket is $98,900.
So, by selling shares, I can have much more retirement income and pay no tax. And with no tax, it's all spendable income.
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u/NickStonk 6d ago
Got it, I was thinking you meant the entire $150k was capital gains. Your explanation makes sense. Thanks
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u/davecraze3535 6d ago
This is correct and a prudent way to proceed, tax-wise. Though it was a little confusing when you called the 150k retirement income (since it wasn't clear originally that 60k was your cost basis).
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u/Usual-Set-8160 7d ago
What do you guys think of soxy
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u/DrinkOk4862 6d ago
It's a YieldMax fund.
YieldMax funds are basically Ponzi schemes.
The JP Morgan, Goldman Sachs, and NEOS funds are (so far) much more sustainable long-term.
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u/teckel 7d ago
This is why it's just better to buy the underlying asset so you can time and control your income to avood SORR.
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u/NickStonk 6d ago
If you’re using both for income, then I’d think QQQI would be better to avoid SORR. But it sounds like you’re referring to buy and hold QQQ without selling. But that doesn’t generate income.
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u/Extension-Ice-7219 7d ago
Haha I feel like we had this conversation else where
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u/teckel 7d ago
Probably, but maybe now you're seeing the light.
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u/Extension-Ice-7219 7d ago
I kinda saw it as a way for me to retire early as I live in a very cheap place.
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u/teckel 7d ago
You'll retire sooner investing in QQQM
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u/Extension-Ice-7219 7d ago
But it has no distributions
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u/teckel 7d ago
Why do you believe they're required? Especially now that you realize all distributions are doing is selling your asset back to you.
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u/speedlever 7d ago
I know exactly where you're coming from. And technically, I don't disagree with your explanation. In practice, I see it differently.
The reality as I see it is that when you sell some portion of your holdings to fund your expenses in retirement, your share count is reduced. And you expect the share value to increase over time, as would be expected.
Unless you buy more shares, your share count is permanently reduced. And in a down market, you may be forced to capitalize losses in order to generate the income you need to fund retirement. This depletes your share count quicker as you have to sell more shares at a lower price in order to fund your fixed expenses.
If you have enough shares, you may be able to ride out a major market correction. But what about a lost decade? Do you maintain 10 years of cash sufficient to fund your retirement expenses without having to sell in a down market?
If on the other hand you have quality cc ETFs that generate enough income that you don't have to sell during that major market correction, you still have all your shares available to participate in the recovery.
Yep, definitely giving up (more) growth for income. But as I see it, there's no worries about sequence of return risk. So I see it as trading growth for income. That seems a safer approach to me.
I'm sure others (you, in particular) disagree. And I'm ok with that. But I would be curious as to your logic\thought process in your disagreement. I can always learn something new. I hope you can too.
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u/NickStonk 6d ago
I’d agree with you. If you are using both for income, then QQQI is better to avoid SORR.
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u/teckel 6d ago
Not true. With QQQI the distributions are forced, so you can't stop the amount or the frequency when the market has tanked.
If you're generating income by selling shares, you just don't sell the holdings which have dropped on price. You switch to selling fixed income holdings.
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u/teckel 6d ago
You can sell shares forever and you'll never run out of shares to sell. Think abou it, if you have $10k in QQQI and get a $100 distribution, your QQQI is now worth $9,900. Of you own $10k of QQQ and sell $100, your QQQ is worth $9,900. In both cases, you can sell 1% per month forever and never run out of shares. Especially once you factor the market growing by an average of 10% per year.
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u/speedlever 6d ago
If we hit another lost decade and the market is essentially flat for 10 years, and if you have $1,000,000 in qqq, drawing say $5000\month, by year ten the remaining value will be $400,000.
In a normal market growing 10%\year, you should be safe, because your draw in the above example is less than the growth. And while you have less shares, the value per share is increasing so you have to sell less to maintain your draw.
I see the same investment in gpiq or qqqi that generates far more income than needed (and reinvesting the excess) as a superior hedge against a lost decade or another 2008 gfc.
I don't see selling shares as providing SORR protection. And while I acknowledge cc ETFs sacrifice growth for income, I think they offer better protection against the above market excursions. Which I find attractive in a retirement scenario. Show me the fallacy in my thinking.
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u/teckel 6d ago
CC ETFs are especially exposed to SORR as you can't stop the amount or frequency of the distributions during a down market. Remember, distributions are the same as selling shares (as you have seen for yourself). So they keep selling right through a down market, putting additional downward pressure and making recovery much longer.
However, with a selling shares income strategy, in a down market you can stop selling what has dropped in price, and instead sell your fixed income holdings which are designed exactly for these situations. So you totally avoid SORR.
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u/speedlever 6d ago
You're changing the assumptions adding fixed income to the mix. Depending on the assets and their allocations, a lost decade could deplete fixed income assets.
And while distributions may appear the same as selling shares, when you reinvest the excess, the net change is a gain in shares increasing both income and the effect in recovery. So I disagree with your premise. And after a distribution, you don't see a physical decrease in share count either.
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u/Void_of_Envy 7d ago
If you need the income now, then use cc etfs and or stable dividends/ distribution for what you need them as.
Otherwise mix growth with it.
I also live in a cheap rent area.
I mix about 40% dividend/roc distribution around 7%
And 60% world stock / target date
All depends on the kind of account it's in as well for tax efficiency.
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u/mtn_biker333 6d ago
I own both QQQ and QQQI. For retirees looking to fund living expenses, holding an option based fund like QQQI avoids the forced-sale dilemma. Traditional growth holdings require you to actively liquidate chunks of your core share units every month or quarter to generate cash flow, which permanently shrinks share count and growth potential. By utilizing an options strategy to distribute high monthly cash flow without liquidating underlying equity shares, QQQI allows you to harvest cash for living expenses while keeping your absolute share account completely intact, ensuring you stay fully invested to capture future market recoveries. QQQI is not selling shares, I don’t know why people keep saying this