Investment firm YieldMax filed an application to launch ETF. The Option Income Strategy product contemplates monthly payouts based on MicroStrategy shares.
If approved, the instrument will trade under the ticker MSTY.
The strategy underlying it—synthetic covered call—involves a combination of buying call options and selling put options to generate cash flow. The latter are distributed to ETF holders as monthly distributions.
The product-generated yield is not directly tied to the growth of MicroStrategy’s stock. According to the statement, its holders can expect payments even if the underlying asset falls sharply.
The ETF does not entail purchasing MicroStrategy shares, only derivatives based on them.
To limit potential losses, MSTY’s upside is capped at 15% for the month.
YieldMax offers a list of 18 similar ETF products based on shares of large tech companies such as Tesla, Apple and Nvidia.
In 2020 MicroStrategy became the first public company to invest part of its capital in bitcoin.
According to BitcoinTreasuries, as of writing the firm’s “paper” profit in the first cryptocurrency exceeds $2.3 billion. The company’s 174,530 BTC holdings account for 85% of its market capitalization.
As reported in late November, the company purchased an additional 16,130 BTC for about ~$593.3 million.