So, I do a lot of buy/writes and covered call writing on long-term holdings, as a core of my investing philosophy. In essence, these YieldMax ETFs do this on a large scale, synthetically, and turn growth stocks into growth and income alternatives, due to their covered call writing strategies.

Here is their site and current offerings: https://www.yieldmaxetfs.com/

I've dabbled in a couple of their offerings (NVDY and TSLY), and am considering more. However, I don't fully understand their degree of correlation and decay characteristics over the long term (these are all basically brand new). Over their short term existence, they are fairly well directionally correlated, slightly underperforming on the upside, and slightly overperforming on the downside. I've noticed some beginning trends of decay versus the underlying stock emerging, but like I stated - it's still too early in their existence to evaluate.

Does anyone have any insights or further analysis on these hybrid ETFs? I think they could make sense for an income portion of a portfolio, but obviously have risks that typical high-dividend stocks do not. Any time synthetic instruments try to imitate something, there tends to be more risk and higher expenses associated with them.

Fire away!

Bump...anyone?

Yeah - I guess this wasn't as exciting a topic as I thought it would be .

To add to my initial post, I paired a significantly out of the money protective long put with my TSLY buy. I bought the puts after a big runup, and they're up over 200% since purchase. I am trying to sell half, and riding with the rest. I figure this can counteract some of the decay, if I time it right. I'm even on TSLY capital gains wise, with 18.4% of my April purchase price received in dividends so far. Obviously, this trial has worked out, but it's a sample size of 1 - no real proof of the concept yet.

I have had an order in for the same strategy (buying puts after a run-up) on my NVDY buy, but they haven't executed yet (I repost the daily trade at or slightly below the bid).

Open to any and all ideas and feedback, including that I'm an idiot for investing in something I don't fully understand. I really am intrigued by the possibilities of these.

This is interesting but reading their website it says that (at least for xomo) that they dont own any shares of XOM.

So then what are they doing if not a traditional buy/write strategy?

I haven't looked at this particular set, but did look at AXS' when they came out last summer. I don't like the asymmetrical nature.

Use TSLA and TSLY as an example. How much upside has not been participated in YTD for the Yieldmax version? I would assume a lot given the positions would theoretically called away. If you are participating in the downside to some meaningful degree, that is a tradeoff I don't want, income can be created elsewhere more efficiently.

AXS has a TSLA bear strategy. Took a quick peek and it is hammered YTD.

Try to remember this when you see 1 yr and 3 yr tracks records of these pop up that look good. There were enough there will be big winners and massive losers. There will be massive survivorship bias that average investor is prone to fall victim too, unfortunately.

If you have a specific view on a specific stock, these can be a cost effective way to express that view, if it exists.

I bot a few TSLY and NVDY just to follow and see how they work and pay dividends and compare to the shares themselves

If they pay anything near their current distribution yield rates, then these are a homerun. Also less capital employed/risk to do buy/writes myself on big dollar stocks

kyle field 94 said:

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This is interesting but reading their website it says that (at least for xomo) that they dont own any shares of XOM.

So then what are they doing if not a traditional buy/write strategy?

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It's definitely synthetic in construction. They likely have modeled combinations which imitate buy-writes, but with the added leverage of using options exclusively to boost income with lower capital costs. I believe there are certainly some "gotcha" scenarios that will expose their methods, but don't know what conditions will cause this to occur. Therefore, I am placing small bets on these instruments (covered somewhat by buying doomsday out-of-the-money puts, as I have noted) to learn more about how these critters will behave.

Good interview with Yieldmax Founder here. I use it in small doses in conjunction with my long Tesla position to generate some yield while holding.

That is a really good video! I figured most of this out intuitively, but several items jumped out at me:

- Treatment of Dividends: I somewhat overlooked the fact that option holders don't have a right to dividends, because TSLA and NVDA don't pay them. However, when they start adding AAPL, XOM, and others, this becomes a real factor. Intuitively, again, it's probably immaterial, as the option pricing adjusts based on inability to claim the dividend, but it's an interesting discussion if anyone has thoughts on it.

- Yield on Treasuries: I understand they have to maintain cash (in the form of Treasuries) as a maintenance reserve, but today's 5%+ yield actually benefits these investments by producing a baseline risk-free return, which is then probably totally offset (I kind of assume they re-invest this in their underlying investing strategy). Interesting.

- No leverage: I don't think I fully understood this - they are NOT using leverage, as other similar investments do. They are simply capturing volatility of the underlying stock, and have no leverage component (he stated 100% exposure - no more, no less). Intuitively, I feel like this should reduce decay vs. other similar instruments, but time will tell.

- Dividend Reinvestment: Another interesting angle I hadn't considered - you can use this as a way to build a growing portfolio of the underlying stock by reinvesting it either into the stock directly, or back into this fund. For someone who can't afford a large initial stake in something like TSLA, this might indeed be an economical way to build up to something sizeable.

- Cat: To the host - how hard is it to keep your cat in another room behind closed doors to avoid distraction during your video?

Bottom line, I think I like these more than I did before, and may continue to add holdings of non-dividend-paying high volatility stocks. Not sure yet about XOM, AAPL and the like.

NOTE: ONLY for those who care, and have an attention span for detail (i.e. not for everyone):

OK - I have some empirical results to share, for what it's worth. To recap - I did a couple real-world small trades to see how these instruments perform. As I stated, I also (being a bit of a skeptic) bought puts on these, as a directional hedge (not perfect one-for-one match) to test those results as well. Here's what's happened (none of these numbers are annualized - they're actuals):

TSLY: Bought 100 shares 11 months ago. Bought two tranches of puts, which I'll only include as ancillary data. II let 100 shares get called away in November, so I had to estimate the dividend what-if #). Results:

• TSLA stock has been on a roller-coaster since I purchased TSLY, but net gain is negative (3.1%)
• TSLY 11-month gain/(loss) = (44.3%) loss - - these clearly have a time decay in a negative market (they already had a reverse split)
• TSLY dividends = right around $1979 (estimated)
• TSLY total return = 9.96% (including dividends)

Factoring in my TOTAL total return with some well-timed (read => likely non-replicable) put-buying, I am up 21.7% in 11 months. As TSLA volatility has decreased the past few months, my dividend rate has trailed off, so I believe the total return will scale down if current trends hold. At a recent pace of around 5% return, I'm less excited about the future in TSLY, but I am happy with the core total return of 9.96 vs. buying TSLA stock for a 3.1% loss.

NVDY: Bought 200 shares 9 months ago. I also bought puts (5/17/24 expiration) in November. Results:

• NVDA stock = up 111.7% since my NVDY purchase date (spoiler - ain't nuthin' gonna top this result)
• NVDY 9-month gain = 20.9%
• NVDY dividends = $1815.64
• NVDY total return = 59.4% (including dividends)

With the puts factored in (which are curiously down in value only 25%), my TOTAL total return is 56.6%. I do NOT think NVDA will replicate the past 9 months performance, so it will be interesting to see how NVDY behaves in a potentially flat-to-down market for the underlying stock. Obviously, I'm very happy with my 59.4% return, and I have no regrets about missing out on the NVDA return of almost double that (I'm sure I hold plenty of NVDA in my ETFs and mutual funds). As opposed to TSLY, the dividend payments have remained strong (and growing) as NVDA continues to be pretty volatile. Last month's actual dividend rate was by far the largest, at over 9%.

I'm drawing no real conclusions yet, as time will prove if these are a worthy way to participate in growth stocks with an income add-on. They may or may not be a good supplement to an in-retirement portfolio. I'll continue to investigate and report back.

If anyone is still reading and has questions, I'm happy to answer. This is kind of a fun research project for me.

Well, my total cash return on NVDY is over 100% in less than 18 months, and I have a small capital gain (11%) on the base holding. I'll take it.

I bought reasonable amounts of AMZY, GOOY, and yesterday bought some MSTY. I offloaded TSLY (entirely at the wrong time, as it turns out, right before their massive rebound).

I see more than half a dozen of their offerings have a stated dividend return of over 100% annually (!). They picked a really perfect market to introduce these "Frankensteined" things in. I still like the strategy conceptually, but in a flat or down market, I'm betting they perform pretty horribly (although I got out of TSLY with a small gain, due to supplementing with some protective puts).

https://www.yieldmaxetfs.com/our-etfs/


Anyone else with thoughts or experiences?

TSLY buys in the mid 11s have been fire. Taken 3 dividend payments on them now and have net free shares that are just going to print cash for me.

$30,000 Millionaire said:

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TSLY buys in the mid 11s have been fire. Taken 3 dividend payments on them now and have net free shares that are just going to print cash for me.

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Update? How do yall feel about TSLY?

I started a MSTY position. Figured I'd see what the hubbub was all about. Have since started small weekly ones with YMAX and YMAG just to test those as well. My main goal for '25 is to go net even and then fund my Roth. If I can do both of those I will be thrilled and consider my experiment a success.

It's a wait and see till then.

YMAX looks very interesting, a "fund of funds" holding all the Yieldmax stuff in one ETF. Weekly payouts instead of monthly. Doesn't pay out as much as some of the others but still, it's a perceived diversification of sorts.

techno-ag said:

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YMAX looks very interesting, a "fund of funds" holding all the Yieldmax stuff in one ETF. Weekly payouts instead of monthly. Doesn't pay out as much as some of the others but still, it's a perceived diversification of sorts.

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Yeah - I looked at that one, too, but I decided to back away for a couple of reasons. One is that it appeared they're piling on another expense ratio on top of the individual funds full expense ratios, so you're paying double (?) for the privilege of diversification. I'm not sure that will pay off over the longer term. My second point is a general unease with the fact that the markets overall have been in "melt-up" mode for longer than any of this Yieldmax collection has been in existence. I simply don't know how they'll perform in a bearish market. The income aspect might overcome the capital drain, but we just don't know. I'll need a bit more real market experience before I'm fully convinced of their methodology.

I'm not personally selling my existing exposure on Yieldmax funds, but just want to present a counterpoint that others might consider before investing. Please continue to share your insights, all!

New one out this week: LFGY. Seeks income via crypto investments. Weekly payouts like YMAX.

Quote:

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LFGY is an actively managed ETF that seeks current income and capital appreciation via direct investments in a select portfolio of crypto industry and tech companies (the "Crypto Companies"). LFGY aims to distribute such income on a weekly basis.

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https://www.yieldmaxetfs.com/our-etfs/lfgy/

Kind of steep atm in the 50s.

Dumped YMAX and put it into YMAG. Liked the prospectus more and still playing these very conservative so didn't want to spread out past 3 funds. Though the new FEAT also look s very intriguing.

Sitting on 4 digits invested each in MSTY, NVDY, and YMAG. Nothing crazy, again, more of an experiment as it still seems one of those too good to be true in the main for me. So still low budget and just reinvesting till I hit net zero on my initial and then I'll fund my Roth this year with it. If I can do all that in '25, I will be extremely happy and will look to expand in the future.

Just need to figure out the new tax situation. I have been W2 my entire life and have never done a quarterly ES payment in my life. NGL, I didn't even realize that was a thing until last week. Doesn't seem difficult at first glance, but also I get the anger at the system now. What a dumb way of doing things.

"Let me just guess what I owe and throw some cash your way every few months so I don't get fined and then at the end of the year you tell me how close I got."

really? REALLY?! This is how the most powerful and advanced nation has evolved into paying it's taxes for some? F'ing stupid...

My read on the Y Max ETFs are they're risky because if they fall too much you'll see a reverse split and lose half your capital. Saw that with TSLY in February.

We also don't know what they'll do in a down market. If MSTR collapses, what happens to MSTY?

Having said all that, no risk no reward.

techno-ag said:

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My read on the Y Max ETFs are they're risky because if they fall too much you'll see a reverse split and lose half your capital. Saw that with TSLY in February.

We also don't know what they'll do in a down market. If MSTR collapses, what happens to MSTY?

Having said all that, no risk no reward.

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Just to clarify - you may indeed lose capital over time on these, but it won't be due to a reverse split. Reverse splits are just like regular splits - they adjust the value and amount of shares to ensure you are in the exact same position economically. I held TSLY during their reverse split, and was not affected at all financially - it's window dressing.

Reverse splits are viewed negatively because they usually occur with stocks that have declined a lot over time, to "get them back in a more favorable or marketable trading range" or to meet listing requirements for their exchange. They have no economic impact on your holdings.

I bleed maroon said:

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techno-ag said:

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My read on the Y Max ETFs are they're risky because if they fall too much you'll see a reverse split and lose half your capital. Saw that with TSLY in February.

We also don't know what they'll do in a down market. If MSTR collapses, what happens to MSTY?

Having said all that, no risk no reward.

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Just to clarify - you may indeed lose capital over time on these, but it won't be due to a reverse split. Reverse splits are just like regular splits - they adjust the value and amount of shares to ensure you are in the exact same position economically. I held TSLY during their reverse split, and was not affected at all financially - it's window dressing.

Reverse splits are viewed negatively because they usually occur with stocks that have declined a lot over time, to "get them back in a more favorable or marketable trading range" or to meet listing requirements for their exchange. They have no economic impact on your holdings.

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You are correct. I worded it wrong. You lose half your dividends.

techno-ag said:

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My read on the Y Max ETFs are they're risky because if they fall too much you'll see a reverse split and lose half your capital. Saw that with TSLY in February.

We also don't know what they'll do in a down market. If MSTR collapses, what happens to MSTY?

Having said all that, no risk no reward.

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Biggest thing I've seen worrying others is just NAV erosion. Which is why I'm focused on going net free first and then reimbursing my Roth. After that I don't care as it's just house money to me. I also don't see MSTR collapsing. Crypto I believe is in a stronger place now and in the near future than it ever has been. Saying that as a long time naysayer as well. I've come around to it. Could be wrong of course. So while I don't see MSTR collapsing any time soon, wild fluctuations could happen with world events but I see that as a positive as volatility is the driving force being YM.

There are also some YMs that are being created to be the inverses of some of the more popular ones currently to help combat market fluctuation. Might be effective? Plus just other strategies being tested as a bunch of new funds just got released and more being proposed. Which ones will succeed and which will die we will have to see I guess. This whole field is still so new. It could all blow up in the end, but also maybe not. Believe me, I am absolutely keeping a massive clamp down on any sort of personal expectations on this topic.

ETA: Also just picked up 20 FEAT shares. Just to see what happens. Guess I'm at 4 funds now. But I really like the strategy behind it and figured I'd jump in and start a position, even though I am expecting to see that NAV erosion hit fairly hard from the initial start. As with the others, I'll manually DRIP it though to offset.

techno-ag said:

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I bleed maroon said:

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techno-ag said:

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My read on the Y Max ETFs are they're risky because if they fall too much you'll see a reverse split and lose half your capital. Saw that with TSLY in February.

We also don't know what they'll do in a down market. If MSTR collapses, what happens to MSTY?

Having said all that, no risk no reward.

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Just to clarify - you may indeed lose capital over time on these, but it won't be due to a reverse split. Reverse splits are just like regular splits - they adjust the value and amount of shares to ensure you are in the exact same position economically. I held TSLY during their reverse split, and was not affected at all financially - it's window dressing.

Reverse splits are viewed negatively because they usually occur with stocks that have declined a lot over time, to "get them back in a more favorable or marketable trading range" or to meet listing requirements for their exchange. They have no economic impact on your holdings.

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You are correct. I worded it wrong. You lose half your dividends.

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Nope. You'll get the same dividend dollars. For instance, in a 1 for 2 reverse split, you will get half the shares, and twice the price and twice the dividends per share. Economically neutral. Nothing to worry about, here.

Eliminatus said:

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techno-ag said:

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My read on the Y Max ETFs are they're risky because if they fall too much you'll see a reverse split and lose half your capital. Saw that with TSLY in February.

We also don't know what they'll do in a down market. If MSTR collapses, what happens to MSTY?

Having said all that, no risk no reward.

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Biggest thing I've seen worrying others is just NAV erosion. Which is why I'm focused on going net free first and then reimbursing my Roth. After that I don't care as it's just house money to me. I also don't see MSTR collapsing. Crypto I believe is in a stronger place now and in the near future than it ever has been. Saying that as a long time naysayer as well. I've come around to it. Could be wrong of course. So while I don't see MSTR collapsing any time soon, wild fluctuations could happen with world events but I see that as a positive as volatility is the driving force being YM.

There are also some YMs that are being created to be the inverses of some of the more popular ones currently to help combat market fluctuation. Might be effective? Plus just other strategies being tested as a bunch of new funds just got released and more being proposed. Which ones will succeed and which will die we will have to see I guess. This whole field is still so new. It could all blow up in the end, but also maybe not. Believe me, I am absolutely keeping a massive clamp down on any sort of personal expectations on this topic.

ETA: Also just picked up 20 FEAT shares. Just to see what happens. Guess I'm at 4 funds now. But I really like the strategy behind it and figured I'd jump in and start a position, even though I am expecting to see that NAV erosion hit fairly hard from the initial start. As with the others, I'll manually DRIP it though to offset.

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I definitely see capital erosion as a significant part of owning these animals. I have bought puts on the underlying to counteract this effect (although imperfectly). In efficient markets theory, the puts should be too expensive to allow this method to work, but it can help ease your mind.

I don't think anyone's really figured these things out yet, so don't feel like the Lone Ranger. Invest with caution!