YieldMax Files Application to Launch an ETF

Investment firm YieldMax has filed to launch an ETF. The Option Income Strategy product offers monthly payouts based on MicroStrategy shares.

If approved, the instrument will receive the ticker MSTY.

The underlying “synthetic covered call” strategy involves a combination of buying call options and selling put options to generate cash flow. The latter are distributed among ETF holders in the form of monthly payments.

The profitability generated by the product does not directly depend on the growth of MicroStrategy shares. According to the statement, its holders will be able to count on payments even in the event of a sharp decline in the price of the underlying asset.

The exchange-traded fund does not involve the purchase of MicroStrategy shares, only derivatives based on them.

To reduce potential losses, MSTY limits the stock’s upside risk to 15% during the month.

YieldMax offers a list of 18 similar ETF products based on shares of large technology companies like Tesla, Apple and Nvidia.

In 2020, MicroStrategy became the first public company to invest in Bitcoin.