When looking for a stock market index to invest in, you might find that the Nasdaq-100 Index (XNDX) is a good choice. This is because the Nasdaq-100 is a great indicator of the health of the entire economy and stocks that are a part of the index tend to perform well. In addition, the index is also a great place to find options to help you gain exposure to various companies and industries.
Investing in the Nasdaq-100
The Nasdaq-100 is one of the best large-cap growth indexes in the world. It allows investors to access a wide range of market sectors, from financial services to information technology. In addition, it provides diversification, which is essential for any portfolio.
Investors must take into consideration several factors when making a decision on whether to invest in the Nasdaq-100. For example, an investor’s risk tolerance and time horizon are important. There are also several different types of investment options, including exchange-traded funds, futures contracts, and mutual fund investment trusts.
If you are interested in investing in the Nasdaq-100, you will want to research the companies that make up the index. This will help you understand how these companies are positioned and why their stocks are so attractive.
The Nasdaq-100 is composed of companies that have developed technologies and services that are advancing the world. Companies such as Apple, Netflix, and Tesla are some of the most popular in the market. They have created major impacts on the global economy.
Many investors see long-term opportunities in the technology industry. As such, investing in Nasdaq 100 stocks could be a great way to capitalize on these trends.
During the IT boom in the late 1990s, stocks in the Nasdaq-100 rose rapidly. Today, however, the index has fallen sharply. Although its decline is due to a variety of factors, it is also affected by U.S. monetary policy.
The US Federal Reserve uses inflation and employment data as its primary basis for monetary policy. However, with record-high global inflation, it is becoming a more hawkish central bank. That means that the Fed may be less likely to moderate its monetary policies in the near future.
Investors who are interested in trading the Nasdaq-100 can use exchange-traded funds or futures contracts. ETFs are cheaper and more suitable for long-term holdings. Futures are leveraged contracts, meaning you can buy more with less capital.
To invest in the Nasdaq-100, open an account with a regulated broker. The broker should offer a reasonable minimum deposit and contract sizes that do not overexpose your account.
Tracking the Nasdaq-100
The Nasdaq-100 index tracks the largest non-financial companies listed on the Nasdaq exchange. This is a modified market capitalization-weighted index.
Some ETFs that track the Nasdaq-100 include Global X Equity Options Fund, First Trust NASDAQ-100 ex-Technology Sector Index Fund, and ProShares UltraPro QQQ. These ETFs offer different strategies to help investors maximize their potential. Depending on their goals, investors can select a leveraged, risk-protected, or thematic approach. Regardless of their strategy, they can choose to shift their exposure to the Nasdaq-100 if they believe that a trend is still underway.
There are many other ETFs available for tracking the Nasdaq-100. As an investor, you’ll want to research the underlying index to decide if a particular fund is suitable for your portfolio. A financial advisor can also help you develop a tailored investment strategy.
Functions
For investors who want to maintain their downside protection while maintaining their upside exposure to the NDX, the Global X Nasdaq-100 Covered Call ETF may be a good choice. This ETF is also a conservative income-generation vehicle. It functions as an inverse CBOE Nasdaq-100 Buy/Write Index ™ and enables investors to capitalize on tax-efficient pivots between equities and bonds.
Other products are available to help advanced investors meet their goals. Dorsey Wright has created a proprietary signal that helps select 21 leading Nasdaq-100 stocks. This method aims to enhance returns and reduce risk.
Another option for investors who want to gain broad exposure to the Nasdaq-100 is the ProShares Nasdaq-100 Dorsey Wright Momentum ETF. This product will be launched in May 2021. Both of these ETFs use a leveraged strategy to triple the daily return of the Nasdaq-100. Leveraged ETFs have a high level of speculativeness and are subject to significant risks. However, if you’re willing to take a chance on the future of the NDX, they could be worth the risk.
If you want to learn more about the underlying index, consider reading this short PDF. Before making a purchase, be sure to do your research to avoid losing money in the stock market.
ETFs that track the Nasdaq-100
A growing number of ETFs track the Nasdaq-100 Index. This index includes the 100 largest non-financial companies on the Nasdaq Stock Exchange. Companies in this index are primarily from the technology sectors.
If you are interested in gaining exposure to the technology sector, the Nasdaq-100 index can provide you with a good place to start. The technology sector has historically outperformed other industries, but you may want to diversify your portfolio in order to minimize your risk.
ETFs that track the Nasdaq-100 offer investors a way to tailor their investment strategies to meet their specific needs. Some funds provide risk protection, while others seek to generate capital appreciation. These products are available from several providers, including Vanguard and Invesco.
For example, the Simplify Nasdaq-100 PLUS Convexity ETF uses a systematic options overlay to boost returns. This ETF invests in large-cap U.S. growth stocks and seeks to enhance performance during extreme market moves.
TUG model
Another strategy that uses a convex investment approach is the TUG Model. TUG models are a tax-efficient way to switch between equities and bonds. It involves selling call options on a reference asset and reinvesting the premium to buy call options on the same reference asset.
If you are looking for a more passive way to invest in the Nasdaq-100, the First Trust NASDAQ-100 ex-Tech Sector Index Fund is a good choice. This fund invests in 60 other Nasdaq-100 companies using an equal-weighted approach.
If you are interested in a more active management approach, the STF Tactical Growth and Income ETF is a good choice. This fund aims to provide capital growth and long-term income through monthly dividends. Investors can toggle between equal-weighted and market-capitalized exposure for a more flexible and balanced investment approach.
Whether you are looking for a more aggressive, long-term capital growth investment or a passive way to diversify your portfolio, the Global X Equity Fund offers five Nasdaq-100 options-based index-tracking ETFs. The fund also offers a 50% allocation to 3-month T-bills for downside protection.
These ETFs are designed to track the Nasdaq-100, but they do not guarantee you profit. Your returns are dependent on your ability to correctly choose and track the market.
Options-based strategies to preserve upside
Options-based strategies are a great way to manage downside risk, protect the upside, and generate income. Understanding how options work and selecting the best strategies to fit your investment objectives can make a big difference in your portfolio.
Options are contracts that give the owner the right to buy or sell a certain number of shares of a stock at a specific price. A put option gives the owner the right to sell a stock at a specific price, while a call option gives the owner the right to buy a stock at a certain price. When the price of a stock is low, the buyer of the put option can profit, but when the price is high, the buyer of the call can lose money.
Option-based collar strategies are a way to reduce risk and limit losses. Collars can be used as an investment strategy that hedges against potential market drawdowns, or as a replacement for an existing exposure. They can be zero-cost, net credit, or debit. Choosing the right strategy can be a difficult decision, so it’s important to evaluate a strategy’s risks and rewards before you invest.
Collar Strategies
Collar strategies provide investors with the flexibility and ability to shift their exposures as needed. That is also ideal in times of macroeconomic uncertainty, as they can help limit volatility within a range-bound return profile.
The Global X Equity Options Fund (NASDAQ: NDX) is a suite of five Nasdaq-100 index-tracking ETFs. It offers a variety of risk profiles, from low risk to moderate risk, depending on the investor’s overall investment objective. Investors can choose between a partial portfolio, which uses a combination of covered calls and growth strategies, or an equity sleeve, which uses a single strategy for all of its exposures.
Some of the new options-based ETFs from Global X is designed to offset the cost of selling calls with a purchase of puts. These products are also known as buffer products, which are designed to guarantee a floor on losses for a set period. Depending on the underlying index or indices, some of these products can offer double-digit share-price gains and higher yields than high-yield bonds.
