YieldMax’s 2024 ETF targets MicroStrategy derivatives
YieldMax, renowned for its expertise in exchange-traded funds, has recently submitted to the U.S. Securities and Exchange Commission an application for a novel yield-bearing ETF for 2024. Named the Option Income Strategy ETF, it focuses on MicroStrategy derivatives.
The ETF, trading as $MSTY, adopts a unique investment approach. It uses a “synthetic covered call” strategy. This strategy aims to generate income by buying call options and selling put options. It promises monthly income for $MSTY ETF holders, regardless of MicroStrategy’s stock performance.
This strategy is independent of MicroStrategy’s stock performance. Thus, the ETF can yield returns even if the stock falls. The fund limits monthly gains from call options to 15%. This balances risk and reward. This strategy potentially makes the ETF a more appealing choice for those interested in earning passive income from market dynamics.
MicroStrategy’s Stock Performance, Bitcoin Holdings
In 2023, MicroStrategy’s stock ($MSTR) value jumped over 290%. This aligns with its aggressive Bitcoin acquisition strategy. By late November, the company held about 174,530 BTC. This is valued at around $7.6 billion.
CEO Michael Saylor champions Bitcoin as a superior asset. He envisions Bitcoin’s blockchain impacting various sectors, like finance and voting.
Regardless of MicroStrategy’s positive perspective within the crypto community, YieldMax’s ETF has stirred debate among investors and analysts. Some see it as a smart way to tap into a volatile market. They appreciate not needing to invest directly in stocks or options. Others are cautious, weighing the strategy’s benefits and risks.
ETFs like YieldMax’s target conservative investors seeking better returns from volatility. This new ETF offers a chance to diversify portfolios. It balances risk with potential returns.
Bloomberg analyst Eric Balchunas commented on X:
My lord, this thing may set world record for highest % yield ever recorded by an ETF. It's a synthetic covered call strategy that sells short term out of the money calls on $MSTR. It has one like it for $TSLA w yield of 72% (w/ $1b in aum btw) but TR is mere 3% (vs 38% for TSLA) https://t.co/iT0qrNpWCe
— Eric Balchunas (@EricBalchunas) December 7, 2023
$MSTR is trading one percent higher in premarket trading. In the past five days, the stock shares gained 13 percent. With their 290+ percent gains, the stock is drawing attention due to its BTC holdings amid the cryptocurrency bull run.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
