YieldMax, an investment firm, has submitted an application to launch an innovative ETF providing monthly yields based on MicroStrategy shares. In a recent filing with the SEC, YieldMax proposed the “Option Income Strategy ETF,” set to debut in 2024, trading under the ticker “MSTY,” closely mirroring MicroStrategy’s existing ticker “MSTR.”
Employing a “synthetic covered call” approach, the ETF combines buying call options and selling put options to generate revenue, distributed as monthly payouts to MSTY ETF holders. Notably, the ETF won’t hold any actual MicroStrategy shares, relying solely on trading MSTR derivatives. To manage potential losses, the fund caps its upside exposure to a 15% gain on call options each month.
Crucially, the monthly yields aren’t directly tied to MicroStrategy stock growth, providing investors with potential earnings even if MicroStrategy shares face a significant downturn.
While some question the appeal of this ETF compared to direct investment in MicroStrategy stock or options, yield-bearing ETFs are often targeted at conservative investors seeking slightly above-average returns with a cautious approach to volatile markets.
YieldMax already offers 18 similar ETF products for other major tech companies like Tesla, Apple, and Nvidia.
MicroStrategy shareholders have experienced substantial gains in 2023, with shares growing over 290% since the start of the year. On November 30, the company’s co-founder, Michael Saylor, announced a significant Bitcoin acquisition of 16,130 BTC for approximately $593.3 million, reinforcing MicroStrategy’s prominent position in the crypto market. As of November 29, MicroStrategy holds around 174,530 BTC, valued at roughly $7.6 billion at the time of publication.