On Thursday, YieldMax rolled out its 46th option strategy ETF. The actively managed YieldMax MSTR Short Option Income Strategy ETF (WNTR) is also the fifth ETF of its kind to be added to the issuer’s lineup. The fund seeks to provide inverse exposure to the price movements in the stock of MicroStrategy Inc. (MSTR) while offering some downside protection and aiming to provide monthly income distributions to shareholders.
WNTR comes with an expense ratio of 1.01% and lists on the NYSE Arca. YieldMax offers similar strategies tied to the stock of Tesla, Coinbase, and NVIDIA and to the Nasdaq-100 Index.
Through a variety of options positions, WNTR seeks to capitalize on price declines in MicroStrategy Inc., up to a limit. The fund offers inverse exposure to MSTR’s price performance as well as generating income from option premiums. The prospectus notes that upside gains from the inverse position are limited when MSTR’s price falls “significantly.”
WNTR’s main strategy involves a synthetic covered put strategy in order to provide that inverse exposure to MSTR’s stock price. Should WNTR’s managers expect a precipitous decline, the fund can also implement what its prospectus terms an “alternative strategy.” The secondary strategy involves selling credit put spreads to further juice returns and inverse downside capture, and the fund can implement it as needed. The fund can also buy out-of-the-money calls for the purpose of mitigating losses.
Although WNTR holds U.S. Treasuries as collateral for its covered put strategy, the securities can contribute to the fund’s monthly distributions as well.
YieldMax’s lineup has accumulated $9.8 billion in assets under management. Its largest fund is the $2.5 billion YieldMax MSTR Option Income Strategy ETF (MSTY ), which applies a covered call option strategy to MSTR.
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