An investment company floats a yield ETF based on micro-strategy stocks
Specialty exchange-traded fund (ETF) firm YieldMax has filed to launch its first yield-yielding ETF product based on its stake in Michael Seiler's bitcoin holding company MicroStrategy.
According to a document filed with the United States Securities and Exchange Commission (SEC) on December 7, YieldMax has officially applied to open an alternative income strategy ETF based on shares in MicroStrategy, with a certain time frame in 2024.
If approved by the SEC, the ETF will trade under the symbol “MSTY” — just one letter away from MicroStrategy's predecessor symbol, “MSTR.”
The Yieldmax Pending ETF uses a “synthetic covered call” strategy, which involves buying call options and selling options to earn income. These earnings are distributed to MSTY ETF owners as monthly payments.
Specifically, the ETF will not own any positions in microstrategy stocks that generate income solely by trading MSTR derivatives. To minimize potential losses, the fund limits its exposure to 15% monthly gain on call options.
Yieldmax The monthly returns generated by the ETF are not directly dependent on the performance of the MicroStrategy's stocks, which means that even if the MicroStrategy's stocks outperform, investors will still receive a yield on the ETF.
Several analysts at X (formerly Twitter) have questioned why one would choose to invest in such an ETF instead of just buying the company's stock or its options.
So first we trade SPX beta which is BTC, then we trade micro strategy which is BTC beta which is SPX beta, then we trade.
Beta beta beta, I found it https://t.co/LrSXfbnP0X
— Marusha (@mattomatik) December 7, 2023
Yield ETFs are typically marketed to conservative investors looking for above-average returns on the most volatile parts of the stock market. Because of the profit limits imposed by fund managers, they are considered a cautious yet more profitable way to generate passive income from large swings in stock prices.
YieldMax offers a list of 18 similar ETF products for other major technology companies, including Tesla, Apple and Nvidia.
Related: Bitcoin's Giant Rally Touches $6B in Shorts This Year – S3 Partners
MicroStrategy shareholders have seen their fair share of excess profits in 2023, with the company's share price up more than 290% since Jan. 1, according to TradingView data.
In the year On November 30, MicroStrategy founder Michael Saylor announced that the company had acquired an additional 16,130 BTC for approximately $593.3 million – an average price per Bitcoin (BTC) of $36,785.
In the year As of November 29th, MicroStrategy holds 174,530 BTC worth approximately $7.6 billion at the time of publication.
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