When seeking to add a technology presence to our covered call writing and put-selling portfolios, we can do so by using exchange-traded funds (ETFs) based on technology benchmarks. Two such reliable ETFs are Technology Select Sector SPDR Fund (NYSE: XLK) and Invesco QQQ Trust (Nasdaq: QQQ). This article will compare the 2 funds to assist in determining which, if either- would make a better candidate for our portfolios.

 

XLK

This is a fund based on the technology stocks present in the S&P 500. Here is a list of the fund’s top 10 holdings as of 5/2021:

XLK: Top Holdings as of May, 2021

 

QQQ

This is a fund based on the top 100 non-financial companies listed on the Nasdaq exchange Here is a list of the fund’s top 10 holdings as of 5/2021:

QQQ: Top Holdings as of 5/2021

 

The top 2 holdings (AAPL and MSFT) are the same in both securities and one other (PYPL) is also found in both top 10s. There is no apparent security advantage based on holdings.

 

Comparison chart in 1 and 3-month time-frames

 

QQQ-XLK Comparison Charts

QQQ slightly out-performed in a 1-month time-frame while XLK slightly out-performed in a 3-month time-frame. This fairly typical of these securities. There is no apparent security advantage based on price performance.

 

Implied volatility comparison measuring risk and premium returns

QQQ and XLK Implied Volatility Stats

 

Once again, there is no apparent difference between the 2 securities as the risk and premium returns, as measured by IV, is similar.

 

Pros & cons

There are little differences between these 2 securities as they relate to option-selling. XLK, as of May 2021, has a much lower price-per-share and QQQ has the Nasdaq 100 Volatility Index (VOLQ) associated with it which can be leveraged into a strategy I developed in 2021:

Click here to read

 

Discussion

QQQ and XLK are both outstanding securities to integrate technology companies into our portfolios for option-selling. Both consist of quality companies and our well-diversified. Price and strategy goals may play a role into final decisions.

 

No price increase for premium members

On November 1, 2021, BCI will be raising membership rates for new members only. This will not apply to current members. It’s been 4 years since we had a rate increase. In that period, we have added dozens of training videos, additional downloads and resources and more quality data to our stock and ETF reports. We are fortunate to have such a robust and expanding membership and strive to provide the best high-quality information and tools at the lowest industry prices.

This price increase will not apply to current active members as you are grandfathered into the current rate for life or as long as your membership remains active. This is our way of showing our appreciation to our long-term members.

The increase for new members will go into effect on November 1, 2021 as follows:

Monthly: $19.95 for the first (trial) month and $57.95 each 30-days thereafter (currently $49.95).

Annual: $657.40 for the first 13 months (includes a reduced first month and a free last month) and then $695.40 every 13 months thereafter (includes 1 free month). Currently $569.40 and $599.40.

All new members who subscribe between now and 10/31/2021 will be grandfathered into the current rate and will see no price increase on 11/1/2021.

Thanks to all our loyal members for your support over the past 14 years and for putting on the financial map.

Premium membership information

 

Your generous testimonials

Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission:

Hi Dr. Ellman,

After a few months of poking around with the various options education and service sites I’ve noticed some general trends. Most of what is offered is either simplified instruction not offering full explanations of risks and procedures. Or, a service designed to send out specific investment recommendations without background explanations. The specific suggestions encourage the subscriber to become dependent on that service.

From my explorations, only the Blue Collar Investor follows through on the motto of becoming the “CEO of your own money.” The available educational materials at BCI are second to none.

This all came into focus over the last few days. I applied for and have been granted an upgraded trading level allowing for PMCC trades. Between the YouTube videos I’ve watched and the instruction from another service that I have a trial membership with, this has been described as merely a less expensive way to simulate a covered call trade. I watched your YouTube video which made clear that there are many “moving parts.” This brought me to the BCI online training video (almost halfway through my first viewing.) There is a very serious difference in quality amongst the resources I’ve viewed so far. The BCI offerings being well above the others.

All the best,

Scott

 

Upcoming events

1.Wealth365 Summit: Free webinar

Monday October 11th at 4 PM ET

Stock Options: How to Use Implied Volatility to Determine Strike Selection

Creating 84% probability successful trades 

This presentation will detail how to use implied volatility stats, standard deviation bell curves and conversion formulas to establish projected high and low ranges for price movement of a security over the life of an option contract.

These formulas will allow us to create 84% probability of success trades where share price is highly unlikely to fall below the breakeven price point or above the out-of-the-money call strike where share retention is a critical aspect of our strategy.

While there is inherent risk in all strategies that seek to beat risk-free returns (Treasuries, for example), the strategies discussed in this webinar will be ultra low-risk and appropriate for most retail investors.

Register here for free

 

2. Money Show Virtual Event: Free webinar

Tuesday November 2nd from 1:30 PM ET to 2:00 PM ET

Converting Non-Dividend Stocks into Dividend Stocks 

Selling call options to create dividend-like cash-flow

Register for free here

 

Alan speaking at a Money Show event

***********************************************************************************************************************

Market tone data is now located on page 1 of our premium member stock reports and page 1 of our mid-week ETF reports.

****************************************************************************************************************