The YieldMax MSTR Option Income Strategy ETF has become a formidable player, boasting a staggering $4.8 billion in assets. Its remarkable 136% dividend yield is closely tied to its association with Strategy, the largest corporate holder of Bitcoin. As investors navigate the burgeoning market of cryptocurrencies, understanding the dynamics between MSTR and MSTY stocks is crucial.
This year, MSTY ETF has seen a monthly inflow increase, accumulating a total of $3.9 billion. Investors are keen to see whether Bitcoin (BTC) will break into new all-time highs, a sentiment echoed by Polymarket traders. The increasing demand stems from the fact that Strategy’s core stock does not pay dividends. Instead, MSTY leverages a covered call strategy to generate its monthly distributions.
In a covered call approach, the ETF invests in Strategy stock while simultaneously selling call options on those shares. This strategy offers premium income, which is subsequently distributed to investors. For those unfamiliar with the concept, a call option grants the buyer the right—and not the obligation—to purchase an asset at a predetermined price before a specified date. If the stock’s value falls below the strike price of the call option, the option becomes worthless.
Investors should evaluate the performance of MSTR and MSTY beyond their appealing dividend yields. Despite MSTY’s attractive 136% yield, its total returns are underwhelming compared to MSTR. MSTY has experienced a decline of 18% year to date, while MSTR has soared, with an impressive gain of 34%. When examining total returns, which integrate dividends, MSTR demonstrates a robust growth of 34.20% this year, outpacing MSTY’s 29%.
The performance trends of these ETFs highlight a broader issue in the market. Similar patterns can be observed with other covered call ETFs. For example, Coinbase stock has surged by 60% in the past year, while the YieldMax COIN Option Income Strategy ETF (CONY) reports a mere 24% increase. Additionally, the notable JEPI ETF consistently trails behind the S&P 500 Index, underscoring the challenges faced by this investment strategy.
In conclusion, choosing between MSTR and MSTY stock hinges on what investors value more: substantial dividends or long-term growth influenced by Bitcoin’s performance. While MSTY offers an enticing yield, MSTR’s performance in a Bitcoin bull run speaks volumes, making it a more robust choice for growth-oriented investors.
