- Option Income Strategy ETF is a product aiming to provide investors with monthly returns derived from MicroStrategy shares, and it plans to be launched subject to SEC approval in 2024.
- Interestingly, the ETF will not hold any actual MicroStrategy shares but will solely generate income through MSTR derivatives.
- ETFs that generate returns like MSTY are typically marketed to conservative investors seeking slightly higher returns than the volatile stock market.
YieldMax, a private exchange-traded fund (ETF) firm, is preparing to launch a unique ETF product linked to MicroStrategy, a company managed by Michael Saylor and the largest corporate owner of Bitcoin.
YieldMax to Offer MicroStrategy-Linked ETF
YieldMax, a private ETF firm, has applied to the U.S. Securities and Exchange Commission (SEC) to launch a unique ETF product based on MicroStrategy shares, the company that owns Bitcoin and is managed by Michael Saylor.
The proposed Option Income Strategy ETF is a product aiming to provide investors with monthly returns derived from MicroStrategy shares, and it plans to be launched subject to SEC approval in 2024. This innovative ETF will trade under the ticker symbol “MSTY” and will use a “synthetic covered call” strategy to generate income, which involves a combination of buying call options and selling put options, and this income will be distributed to MSTY ETF holders in the form of monthly payments.
Interestingly, the ETF will not hold any actual MicroStrategy shares but will solely generate income through MSTR derivatives, reducing exposure to potential losses. The fund also limits its upside exposure with a monthly gain of around 15% in call options. Importantly, the monthly returns of the MSTY ETF will not be directly tied to the performance of MicroStrategy shares, providing income to investors even in the case of a significant drop in the stock price of MicroStrategy.
The launch of YieldMax’s MSTY ETF raises questions about why investors might prefer such a product over directly buying MicroStrategy stocks or options. ETFs that generate returns like MSTY are typically marketed to conservative investors seeking slightly higher returns than the volatile stock market. These ETFs are seen as a tool to passively earn income amid significant fluctuations in stock prices, offering a careful yet potentially more lucrative way to generate alternative income.
YieldMax has a history of offering similar ETF products linked to major technology companies like Tesla, Apple, and Nvidia. The company’s expertise in creating ETFs that generate returns for technology giants shows its commitment to providing various investors with alternatives for earning income.
A Remarkable Year for MicroStrategy
MicroStrategy shareholders experienced significant gains throughout 2023. The company’s stock price increased by over 290% since the beginning of the year. Michael Saylor, the founder and CEO of MicroStrategy, announced that the company has purchased an additional 16,130 bitcoins for approximately $593.3 million, at an average price of $36,785 per bitcoin. As of November 29, the company holds approximately 174,530 bitcoins, valued at around $7.6 billion at the time of writing.
