Summary The YieldMax MSTR Option Income Strategy ETF is rated a buy for its consistent income and reduced exposure to MSTR's Bitcoin-driven volatility. MSTY's options strategies—covered calls and call spreads—allow investors to capture premiums while limiting downside, making it attractive in stagnant or declining MSTR scenarios. MSTR maintains robust reserves, supporting over 30 months of dividend coverage and 53 years with BTC reserves, mitigating payout and solvency risks. Supportive U.S. crypto policy and prudent management of options strategies position MSTY as a compelling vehicle for income-focused exposure to MSTR. Introduction The YieldMax MSTR Option Income Strategy ETF ( MSTY ) is a fund that aims to provide weekly income for investors by selling call options or call spreads on Strategy ( MSTR ). This allows investors in the fund to capture premiums for income while participating in some of the upside and appreciation of MSTR. See below for details of the fund, from the website . YieldMax MSTY is a buy because it provides consistent income for investors and limits the raw exposure to MSTR, which is a volatile name that experiences heavy swings due to Bitcoin swings. Below, we will outline some recent news and highlights of the underlying company, MSTR. Recent news that impacts MSTR The firm remains steadfast throughout the swings that have occurred in Bitcoin Despite all of the ups and downs that Bitcoin investors have faced over the past few months, MSTR and Executive Chairman Michael Saylor remain bullish on the currency long term. Just last week, the firm disclosed a purchase of BTC in the form of 2,486 new coins for a total of $168.4M. See the image below from MSTR that highlights their recent purchases as well as their overall cost basis. Strategy As you can see, the firm’s average cost basis on BTC is $76K, which for now remains above the current prices of BTC at around $66.7K. This delta is where Saylor and the people who believe in the mission of MSTR can argue that on a long-term basis, these swings in the currency, and therefore the stock, are meaningless and do not dilute the overall thesis. MSTR is becoming more of a financial engineering company The firm, late last year, announced a pivot of its maturity based convertible debt into perpetual preferred stock, which should help to reduce its future ongoing refinancing risk and dampen credit-based volatility across its balance sheet. The firm offers “perpetual dividends” in the form of 4 different instruments: Stride, Stretch, Strike, and Strife. These sum to combined annual dividends for their holders of over $876M. To minimize distribution risk on these instruments based on the volatility of the BTC market, the firm also has a $2.25B reserve, which reduces the payout risk and allows the firm more options to fund these distributions. See the below details on this arrangement from the website of MSTR. Strategy As you can see, even though the stock is down 63% on a 1-year basis, the firm still has enough reserves across its portfolio to cover 30.1 months of dividend coverage as it stands today. With their BTC reserves, they have enough to cover over 53 years of ongoing dividends for their investors. MSTR, clearly, has been engineered well enough to sustain its creditor operations for the foreseeable future despite the BTC volatility. The current administration is very supportive of crypto assets, and this is a strong tailwind for the industry as a whole The Trump administration has clearly outlined their bullishness on the crypto industry as a whole. In fact, just earlier today the President’s sons, heads of World Liberty, hosted a forum on crypto in America. This is consistent with the news and releases that have come out of the White House, including this Presidential Action that was released in 2025 that emphasizes the President’s desire to turn America into the epicenter of digital financial technologies. We believe that this push from the administration will serve as a strong push for the industry overall, and that this momentary dip in the markets should be considered a long-term buying opportunity. Additional actions such as forming the Strategic Bitcoin Reserve also prove that the administration is supportive of digital assets, and BTC should remain a strong long-term play. This backing from the administration should provide relief to investors in the long run, and this short-term weakness should be nothing but an opportunity for those looking to establish a position. BTC is notoriously volatile, and these swings are to be expected. Options Strategy The fund’s main strategy is to purchase shares of MSTR and then sell covered calls on those shares. An alternate strategy employed is the covered call spread strategy. Both of these strategies are considered “synthetic” because the fund does not directly buy the shares of MSTR. Instead, they purchase option contracts in a manner that mimics the same returns as you would get by owning the shares. For this analysis, we will assume that the fund is buying the shares directly. The overall strategy works out the same. Let’s look at the primary strategy of covered calls using an example scenario: We purchase 100 shares of MSTR at $100 per share We sell a covered call with a strike price of $110 and make $200 in premiums The below chart compares this strategy with the strategy of just buying the shares (no options traded). Doodad Capital The chart has the following properties: At generally lower prices, the “with option” strategy is better. At the higher end of the range, the shares only strategy is better Why is this the case? It has mainly to do with the option premium and strike price. When the shares of MSTR go above the strike price (in this case $110), the purchaser of the option will exercise the option and buy 100 shares from you for $110 each. You will then be left with no positions because the shares are sold and the option contract is closed. This is why the blue line flattens past $110. Below $110, the only impact of the option is the premium you gained. This is why the option strategy is better at lower prices of MSTR. Overall, with this strategy, we see that the best scenario after selling the call options is for the share price to go as close to $110 as possible without going over. Assuming you already own the shares of MSTR, the covered call strategy is best when you think the price of MSTR will decline, or at least not increase by much. The other strategy employed by the fund is the covered call spread. With this strategy, the fund also buys shares of MSTR. However, instead of selling a single call, the fund instead will buy a call option at a strike higher than the current share price and then sell a call option at an even higher strike. We will use this scenario: Buy 100 shares of MSTR at $100 per share We buy a call option at a $110 strike for $300 We sell a call option at a $120 strike for $150 Doodad Capital In this strategy: At generally lower prices, the shares-only strategy is better At generally higher prices, the covered call spread strategy is better In this case we are starting at a deficit of $150. This is because buying a call at a lower strike will cost more than buying one at a higher strike. That is why, without exercise impacts (aka below the lowest option strike of $110), the shares-only strategy is better. However, at higher prices, the $110 strike we purchased will start returning value. After we lose some opportunity value of the shares, we will be obligated to sell. However, that will be more than offset by the returns on the $110 strike option. As stated in the prospectus about the covered call spread strategy, “The Adviser will primarily employ this strategy when it believes that the share price of its Underlying Security is likely to rise significantly in the short term.” The fund does not explicitly specify when they used the covered call strategy, but we can infer that they will use it when they believe MSTY will drop or only increase modestly in the short term. These strategies are aligned with our analysis above. Similar ETF Comparison and Comparison to MSTR We look at other MSTR based ETFs to see how MSTY stacks up: Seeking Alpha We see that in terms of AUM, MSTY is the biggest. In terms of expense ratio, it’s one of the lowest, however, by about 50% compared to the most expensive one ( MSTP ). We also looked at the total performance (which includes dividends) comparison of the funds. The general trends are similar, but we can see that MSTY is clearly beating the pack with only ~54% loss in the last year compared to ~76% loss for the next best ( MSTW ) and ~94% loss for the worst one ( MSTX ). Overall, MSTY stacks up favorably compared to similar options. Seeking Alpha Over the past year, holding MSTY would have been slightly better than holding MSTR outright, as you can see from this chart. This is a total return chart, which includes the income that MSTY would have provided to its investors. It has outperformed its underlying holding over the past year, which is a strong reason for investors to consider a position in MSTY. Risks Management efficacy As we discussed, there are 2 different strategies the fund employs. Generally speaking, one strategy is better when the stock is predicted to increase in value, and another strategy is better when the stock is predicted to remain stagnant or decrease in value (assuming you already own the shares). In either case, it is up to management to make the right prediction and employ the appropriate strategies at the appropriate strike prices and premiums. These are a lot of decisions to make, right? And of course, the stock market is notoriously difficult to predict. Near-term volatility can cause increased selling pressure on MSTR As BTC continues to swing, there remains the risk that MSTR becomes more and more underwater on its treasury. However, as all of its BTC holdings are unencumbered , meaning that they are not pledged as collateral on anything, the firm has a large amount of flexibility before it may face any solvency issues. This risk remains low for now. Conclusion MSTY is a fund that allows investors to gain income on a very volatile asset, which is further amplified by the swings of BTC. However, this ETF shields investors from a significant amount of this volatility, and we rate it a buy. MSTR remains a solvent vehicle for BTC investments, and the Executive Chairman is the most outspoken long-term BTC bull. If the management can prudently employ the strategies discussed, MSTY can be a great vehicle for investors to gain exposure to MSTR while also making a little extra income.
