The QYLD Infinite Money Glitch Explained

Is buying QYLD on margin the secret to free money? With margin interest rates so low, and QYLD's dividend so high. Many people are investing on margin to arbitrage the difference between QYLD dividend yield and their margin interest rate. So let's take a look at how investing on margin works, and if buying QYLD on margin really is the secret to huge monthly dividends.

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A bit about my credentials...I have a B.S. degree in Finance, I've spent my entire career working in various corporate finance roles, and have been an active stock market investor for over 20 years. While all of this means I know what I'm talking about (most of the time!), it does not mean you should act solely on my word alone.

I am not intending to, nor licensed to give personalized financial advice. I'm merely trying to share my knowledge and experience so that you are able to make better financial and investment decisions for yourself based on your own research!

Put another way...

DISCLAIMER: Jay Fairbrother, including but not limited to any guests appearing in his videos, are not financial/investment advisors, brokers, or dealers. They are solely sharing their personal experience and opinions; therefore, all strategies, tips, suggestions, and recommendations shared are solely for entertainment purposes. There are financial risks associated with investing, and Jay Fairbrother’s results are not typical; therefore, do not act or refrain from acting based on any information conveyed in this video, webpage, and/or external hyperlinks. For investment advice please seek the counsel of a financial/investment advisor(s); and conduct your own due diligence.

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[EvanJWilliams]

JAY!!! What’s up bro? Qyld is a silent beast!! I actually do covered calls on most of my stock holdings as well. I’ll be doing a video on this subject really soon.

[MMuniz]

Excellent video on an interesting topic. I’ve been doing this for a long time, even made a video on it a few months ago, but yours really breaks down the risks a lot better than I did. I think QYLD on margin is a great idea if it’s a super small percentage of your portfolio, that way even if maintenance changes, you shouldn’t be at risk. My portfolio could drop 80% and I still wouldn’t be margin called. I just like to use it for basically a car payments of free income per month (though I don’t have a car payment) lol. Great content as always, I’ve been watching you for a while!

[slickwilly]

I would love to see a comparison between partial dividend reinvestment of QYLD to JEPI with no drip (dividend reinvestment).

Reason for this comparison is that JEPI only uses half of its shares to Covered Calls while QYLD does 100% covered calls.
I would do this if I could but cant at all, and I expect others cant figure out how to do this ether. So, basically without your help we will never know.

[KennyZ]

Haha I'm doing this with an M1 portfolio: All 25% DGRO, SCHD, JEPI, DIVO. Borrowing against this to buy : 50% JEPI and DIVO at 2% interest.

The yield is reinvested into the main portfolio. Doing buy & hold 👍 When I hit my goal, I'll start reducing the margin.

[charlesjohnson]

I dunno, if QYLD dividend is 11% and buying it on margin is only 2% that seems real tempting to me!

[dominikfrohlich]

That’s why you don’t use ALL the margin you have but only 50% of it. So you don’t get a margin call even if your investment drops by 50%. Of course this doesn’t protect you from the broker simply changing the maintenance line, which is why the first thing you do after using margin is pay it back in full.

[TheAndrewLopezFinancePodcast]

Margin call? But Jay, those are impossible because STONKS Only go up! 🤷‍♂️

[Steponaduck]

Absolutely love this content. Great job

[MaxTalks]

Sounds scary affff, glad I'm steering clear of margin investing :)

[Widemouth]

I know that I with my conservative investment strategy I will likely never have large gains or large losses. But, man I sleep well at night knowing I own all of my stocks, and the worst thing that can happen is the stocks go to $0.00. Not -$50K.

[InfoRanker]

You can also sell covered calls against it. :-p

[Kj-xjpp]

Great come back video. The explanation is greatly appreciate. Since I’m a new self investor, margin doesn’t seem like my friend. Like saying goes if it’s not broken why fix it. The long slow sturdy path is definitely my friend....LoL

[Thend]

Do not do this. I was doing this with a dividend stock and the maintenance level got hiked to 80/75 overnight and was asking for a 40k margin call.

[johnellison]

You are missing one REALLY BIG part of the equation here - there is no arbitrage! When QYLD pays its dividend each month, the value of QYLD shares drops automatically by the value of the dividend. This is true for all dividend paying stocks, ETFs, mutual funds, etc. - and it's why there is no arbitrage available for trading around dividends. In other words, when QYLD pays a dividend, the value of your account doesn't go up by that dividend amount. Your cash balance goes up, and your QYLD position value goes down. Otherwise, every hedge fund and money manager in the world would trade this strategy to maximum leverage, and every one of them would crush their benchmarks each year - which is very much not the case. Sorry to be the one to tell everyone there is no Santa Clause, but this is the reality.

[considerthepossible]

What about a stock like mtbcp? It pays a decent dividend and has a relatively stable share price.

[Alyosha-nmio]

Just my opinion here, don't do this unless you know what you are doing and are comfortable with the taxes ect on qyld, I only buy with my own cash.again just my opinion NFA.

[RealTalkCali]

QYLD has been dropping in price since inception! You will get margin called and REKT!

[deadly]

Yes but 7 months later qyld is worth 19$ so lost over 3$ a share

[jongroubert]

Boy, was this a great video. First you dangle this "perfect" way of making a ton more money in front of me. Then, you wisely yank it away and explain 10 ways to Sunday why buying on margin is a big, BIG mistake. Thank you!

[mushroomcomic]

Does qyld yield goes down of the shares go down as well?