YieldMax, a niche exchange-traded fund (ETF) provider, intends to launch an innovative ETF linked to Michael Saylor’s Bitcoin-focused firm, MicroStrategy. This new product will provide yields to crypto investors, making it the market’s first of its kind.
Introducing Option Income Strategy ETF
YieldMax officially requested the introduction of its Option Income Strategy ETF in its latest SEC filing. This move represents a significant step forward for YieldMax, expected to hit the market in 2024.
Should the SEC approve this financial product, the ETF will trade under the “MSTY” ticker symbol, similar to MicroStrategy’s “MSTR.” The company’s upcoming ETF employs a novel strategy called “synthetic covered call.”
This strategy combines call options with put options to generate passive income for investors. MSTY ETF investors can expect monthly payouts derived from these earnings. What distinguishes this ETF is that it will not hold any direct MicroStrategy shares.
Instead, YieldMax aims to make money solely by trading MSTR derivatives. To mitigate potential risks, the fund limits its exposure to a maximum monthly gain of 15% on call options.
This approach provides a novel investment opportunity and reveals a strategic way to generate revenue without physically owning the underlying assets. If given the green light, the MSTY ETF will provide investors with a novel way to participate in MicroStrategy’s market movements while minimizing certain risks associated with traditional investment approaches.
Crypto Community Skeptical Of New ETF Offering
According to an official YieldMax statement, the ETF’s monthly yields are not based on MicroStrategy’s stock growth. Thus, investors could benefit from the ETF even if MicroStrategy’s stocks suffer significant losses.
However, several commentators on the X platform questioned why this ETF was chosen over directly purchasing the company’s stock or options. The critics maintain that launching ETFs is a never-ending phase to satisfy the creator’s quest for relevance.
Meanwhile, the YieldMax ETF appeals to conservative investors seeking slightly higher-than-average returns in volatile stock market segments. They present a careful and more lucrative means for generating passive income.
This suite of offerings caters to investors seeking similar income strategies across various tech companies.
MicroStrategy’s Growing BTC Stash
Meanwhile, TradingView data shows MicroStrategy shareholders have seen significant gains in 2023, with the company’s shares increasing by more than 290% since January 1. On November 30, MicroStrategy co-founder Michael Saylor announced the purchase of an additional 16,130 BTC for approximately $593.3 million, or $36,785 per Bitcoin (BTC).
MicroStrategy had approximately 174,530 BTC as of November 29, valued at around $7.6 billion based on the current market price. This substantial Bitcoin accumulation reflects the company’s ongoing commitment to incorporating cryptocurrency into its financial strategy.
Observers believe that MicroStrategy’s Bitcoin-centric approach will continue positioning the company among the largest BTC holders.