Income investing is so much more than just considering the yield of a dividend-paying company or ETF. There may be instances where you see excessive yields and think that maybe it was a one-off payment or part of a spin-off initiative or a big red flag displaying financial distress. 

So, when you see an ETF like the Yieldmax MSTR Option Income Strategy (NYSEARCA: MSTY) with its 136.57% yield, you might think that this has got to be some kind of mistake. But then you check the payout history, compare it to the company’s announcements, and, well, it seems to check out. 

And that would likely leave you wondering what MSTY is all about - and if it’s a viable investment option for you. So, today, I’ll talk about the ETF, how it earns those yields, and its pros and cons. 

Yieldmax MSTR Option Income Strategy (MSTY)

The Yieldmax MSTR Option Income Strategy is an ETF managed by Yieldmax, a firm that specializes in options-based ETFs. The firm’s first product was the TSLA Option Income Strategy ETF (NYSEARCA: TSLY) - which, as of the time of writing, has a 120.84% yield. I’ll compare TSLY and MSTY more later. 

Going back, MTSY focuses on delivering returns on Strategy Inc. (MSTR), previously known as MicroStrategy Inc., a company that primarily invests in Bitcoin (BTC). Strategy Inc. started accumulating BTC in August 2020 as a “treasury reserve asset” but has since dropped its own business model to buy as much BTC as possible using cash, debt, and equity sales. 

As of June 6, 2025, Strategy holds 580,955 BTC, which is worth approximately $59.8 billion, with an average cost basis of $70,023 per coin, or around $40.67 billion. 

As such, investors and analysts view MSTR as a proxy for owning Bitcoin and the cryptocurrency market as a whole, given that Bitcoin is considered the bellwether for the entire crypto ecosystem. Since BTC is one of MSTY’s largest holdings, let’s review the relationship between BTC and MSTR. 

Bitcoin-MSTR Comparison

MSTR maintained a relatively stable pace with BTC between 2020 and 2024, but growth rates diverged in March 2024. Over the past five years, Bitcoin has increased by 3,079%, while MSTR has risen by 1,019%. So, for every 1% of BTC growth, MSTR went up roughly 0.33%. That gives us an idea of its growth ratio. 

That said, over the past twelve months, MSTR was up 137.09%, outpacing BTC’s 53.67%. Clearly, something changed for MSTR. And while MSTR outperformed BTC, we also can’t forget to account for downside risk. BTC is trading at around $103k today, so if Bitcoin prices fall significantly, MSTY may underperform BTC, falling further. That said, Strategy Inc. has a history of raising capital through debt issuance and preferred shares, which, if history is to repeat itself, may use the funds to acquire further BTC at a discount.

MSTY ETF Strategy - How It Generates Income

The Yieldmax MSTR Option Income Strategy ETF earns its distributions by buying and selling options on MSTR as the underlying. 

Another thing you’ll notice is that MSTY also invests in treasury bills, which can also be used as collateral for their short positions. 

Speaking of which, practically every short call position here is short-dated and close to the money, the closest of which are the 380-strike calls expiring today, on June 6. For reference, MSTR is trading at $368.79 at the end of the trading day on June 5. These 380 strike calls are currently 3% out of the money - meaning they will likely expire worthless. 

So, it’s fair to say that MSTY is using a high-risk, high-reward strategy, which is reflected in its price action. Speaking of which—

How Does MSTY’s Total Return Compare With its Peergroup?

Considering the high distributions, looking at the ETF’s price alone isn’t enough to determine the total return. So, I looked at the initial trading price of MSTY and it’s four peers. Then, I compared it with the last trading price, and added in the total distributions each fund paid out todate. This gave me a total return which can help you determine which fund (if any) is best for you. 

	IPO Price	Price as of June 5	Total Distributions Paid	Total Return
TSLY	$40.88	$7.70	$33.17	-0.02%
MSTY	$21.60	$20.27	$38.37	171.48%
CONY	$13.43	$7.71	$29.35	175.95%
YBIT	$19.93	$10.39	$10.48	4.71%
MARO	$47.79	$22.27	$11.45	-29.44%

 As you can see, in the case of TSLY, YBIT, and MARO, the distributions are attractive, but they eat away at the ETF's trading price, so much so that you might as well consider the yields as a return of capital, not a true and reliable income source. MSTY and CONY have fared better, with a total return of 171.48% and 175.95%, respectively. 

On the subject of income, let’s talk about distributions. 

MSTY's Distribution History

The fund pays a monthly distribution (schedule found here) and has been doing so since April 2024. Its latest payout was $1.4707 (with a June 4 ex-date and June 5 payment date, which explains yesterday's matching drop in price). The payout was also 38% less than the previous month's distribution - though as you can see, it does go up and down, based on the options premium the fund receives and underlines just how risky the investment is.

 

Pros & Cons of Owning Yieldmax MSTR Option Income Strategy

Let’s go over MSTY’s risks and advantages so you can decide for yourself if this investment has a place in your portfolio.

Pros

MSTY’s yields are no joke. As of June 5, its average monthly distribution is approximately $2.56, which translates to $30.72 annually, representing a yield of around 151%. 

Even if we assume that the next eleven distributions will all be $1.47 (to get your fwd yield), it would still add up to an annual payout of around $17.64, translating to an 87% yield. That kind of yield is rare and salivating enough to buy on risk alone as income investors have grown accustomed to earning 3-5%. 

Next, the ETF allows you to profit from option and crypto trading without actually trading options and crypto. This can be a significant advantage for investors seeking to diversify their holdings but are not yet comfortable with trading derivatives or outside of regulated markets. 

Lastly, MSTY’s strategy is perfect for low-growth or sideways crypto markets, allowing investors to profit during quieter periods. However, I can’t recall “crypto” as ever being “stable”.

Cons

One must consider MSTY as a high-risk investment. Yes, yields are high, but they might not be enough to cover short-term losses. To be sure, the risks are tied through Strategy Inc. - even if the fund doesn’t invest in MSTR directly. That and Bitcoin is notoriously volatile and can experience massive price swings in short periods. Bitcoin volatility means a possible decline in Strategy Inc.'s stock value, which could reduce the value of MSTY's NAV should MSTR move above  (for calls) or decline below (for puts) the option strikes - and, therefore, lower its distributions.

On the other hand, you also need to consider MSTY’s strategy - collecting option income. You could likely achieve better distributions by reproducing MSTY’s model by investing in MSTR and BTC and selling calls and puts directly - though this would require quite a lot of capital to do.

Final Thoughts

MSTY’s distribution is undeniably attractive, especially at first glance. However, it comes with risks that may not be suitable for the typical, risk-averse income investor seeking consistent cash flow from a stable retirement portfolio. 

Still, for those with higher risk tolerance, a clear understanding of how the strategy works, and happy with the fund's return of capital, MSTY can be a choice investment.

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.