Get Exposure to Bitcoin Without Buying It Directly: YieldMax’s MicroStrategy ETF

YieldMax, a private ETF provider, has sent a proposal to the U.S. Securities and Exchange Commission (SEC) to come up with that one-of-a-kind ETF product based on MicroStrategy shares, which are owned by Michael Saylor’s firm.

The proposed Option Income Strategy is a product that intends to provide monthly profits generated from MicroStrategy shares to investors. It is set to start in 2024, subject to SEC approval. This unique ETF will trade under the ticker symbol “MSTY” and generate income using a “synthetic covered call” strategy, which is a combination of acquiring call options and selling put options, with the revenue distributed to MSTY ETF investors in the form of monthly payments.

All about the strategy

Surprisingly, the ETF would not own any actual MicroStrategy shares, instead generating income entirely through MSTR derivatives, lowering exposure to possible losses. With a monthly gain of roughly 15% in call options, the fund also reduces its upside exposure. Importantly, the monthly returns of the MSTY ETF will not be directly linked to the performance of MicroStrategy shares, delivering income to investors even if the stock price of MicroStrategy falls significantly.

Why should Investors be preferring this?

The introduction of YieldMax’s MSTY ETF begs the issue of why investors would prefer such a product over simply purchasing MicroStrategy equities or options. Return-generating ETFs, such as MSTY, are frequently offered to conservative investors seeking somewhat higher returns than the volatile stock market. These ETFs are seen as a tool for passively making money in the face of significant volatility in stock prices, giving a cautious but potentially more lucrative way of generating alternative income.

YieldMax has a track record of providing comparable ETF products tied to key technological firms such as Tesla, Apple, and Nvidia. The company’s skill in developing ETFs that create returns for IT behemoths demonstrates its dedication to provide varied investors with income-generating options.

A Happening Year for MicroStrategy

Throughout 2023, MicroStrategy shares saw considerable returns. Since the beginning of the year, the stock price of the firm has climbed by more than 290%. MicroStrategy’s creator and CEO, Michael Saylor, announced the acquisition of an additional 16,130 bitcoins for about $593.3 million, at an average price of $36,785 per bitcoin. As of November 29, the corporation had around 174,530 bitcoins, which were worth approximately $7.6 billion at the time of writing.