Nasdaq 100 Volatility Index hits a 6-week low ahead of Q2 earnings season.

The Nasdaq 100 Volatility Index (VXN) has reached its lowest level since February 13, indicating a 1% daily swing in the Invesco QQQ Trust ETF. This low volatility limits the potential income from covered call options, making it a challenging time for investors to generate returns through this strategy.

The Nasdaq 100 Volatility Index (VXN) has reached its lowest level since February 13, indicating a 1% daily swing in the Invesco QQQ Trust ETF. This low volatility presents a challenging environment for investors seeking to generate income through covered call options. The Invesco QQQ Income Advantage ETF (QQA) is particularly affected, as its strategy of blending equity securities tracking the Nasdaq-100 with options-based income strategies relies on market volatility to generate returns [1].

In 2025Q1, Invesco QQQ Income Advantage ETF reported strong financial performance, with revenue of $1.47 billion, net income of $267.30 million, and earnings per share (EPS) of $0.38 [1]. However, the recent decline in the VXN may limit the fund's ability to extract income from the Nasdaq-100 Index. Analysts have highlighted the fund's high-income potential but cautioned that low volatility could impact its performance [1].

The recent inclusion of Thomson Reuters (TRI) in the Nasdaq-100 Index, replacing ANSYS (ANSS), may also have implications for the Invesco QQQ Income Advantage ETF. The addition of TRI, a component of the Nasdaq-100 Tech Sector Index (NDXT), could introduce new opportunities for the fund, as it seeks to capitalize on market volatility and extract income [2].

Investors should monitor the VXN closely, as changes in volatility will significantly impact the performance of the Invesco QQQ Income Advantage ETF. The fund's ability to mitigate volatility while generating income remains a key factor driving its prospects. Despite the challenges posed by low volatility, the fund's innovative blend of equity and options strategies continues to be a viable option for investors seeking to supplement fixed income amid rate cuts [1].

References:
[1] https://www.ainvest.com/news/invesco-qqq-income-advantage-etf-qqa-2025q2-earnings-preview-upside-potential-high-dividend-yield-2507/
[2] https://seekingalpha.com/news/4469081-thomson-reuters-to-join-nasdaq-100-index-replacing-ansys