Zinger Key Points
- WNTR uses a synthetic covered put strategy to offer inverse exposure to MSTR, but only to some extent.
- The timing is interesting, as MSTR has just increased its Bitcoin holding.
- Feel unsure about the market’s next move? Copy trade alerts from Matt Maley—a Wall Street veteran who consistently finds profits in volatile markets. Claim your 7-day free trial now.
As MicroStrategy Inc. MSTR increases its Bitcoin purchases, investors now have a new vehicle to hedge against future declines. YieldMax has introduced the YieldMax MSTR Short Option Income Strategy ETF WNTR, an actively managed ETF that seeks to benefit from MSTR stock price decreases while providing monthly income.
This is YieldMax’s 46th options strategy ETF and the fifth in the company’s expanding roster. The timing is interesting, as MSTR has just increased its Bitcoin holding, adding even more to its exposure to the cryptocurrency’s volatility. For those worried about contemplated price corrections, WNTR is a structured means to avoid downside risk.
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WNTR uses a synthetic-covered put strategy to offer inverse exposure to MSTR, i.e., it profits when the stock price goes down—but only to some extent. However, the potential upside from MSTR’s dips are capped when the stock declines considerably, as per the prospectus of the fund.
Where WNTR’s managers expect a sharp decline, the fund can pursue an alternative strategy through selling credit put spreads. This strategy maximizes potential returns while preserving inverse downside capture. The fund can also buy out-of-the-money calls as a hedge against surprise price rebounds.
The ETF has an expense ratio of 1.01% and collateralizes its covered put positions in U.S. Treasuries. In addition to supporting the strategy of the fund, these holdings also make their way into the fund’s monthly income distributions—a big draw for investors looking for consistent returns.
YieldMax has been adding to its lineup of options-based exchange-traded funds (ETFs), with WNTR being added to other strategies with Tesla, Coinbase, NVIDIA and the Nasdaq-100 Index. The $2.5 billion YieldMax MSTR Option Income Strategy ETF MSTY is its largest ETF yet, and it employs a covered call approach to MSTR.
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