YieldMax, a company specializing in exchange-traded funds, has filed for a new ETF that focuses on derivatives of MicroStrategy, a company with massive Bitcoin holdings. The ETF aims to provide monthly income to investors with a balanced risk strategy. The ETF, named Option Income Strategy ETF and set to debut in 2024, will trade under the ticker MSTR and will use a unique investment strategy to generate income for its holders.
The MSTR ETF will use a technique called “synthetic covered call” to create income from the derivatives of MicroStrategy, a company that holds a large amount of Bitcoin on its balance sheet.
The ETF will buy call options and sell put options on MicroStrategy’s stock, which will allow it to profit from the volatility of the stock price, regardless of its direction.
It will aim to provide monthly income to its holders, with a limit of 15% gains from call options to balance risk and reward. The ETF will also hedge its exposure to MicroStrategy’s stock by holding cash or cash equivalents. This way, the ETF will be able to offer a steady income stream to investors who want to benefit from MicroStrategy’s Bitcoin exposure without owning the stock directly.
MicroStrategy is one of the most prominent companies in the crypto space, as it has been aggressively accumulating Bitcoin since 2020. The company currently owns about 174,530 BTC, worth around $7.6 billion, making it one of the world’s largest corporate holders of Bitcoin.
The company’s CEO, Michael Saylor, is a vocal advocate of Bitcoin and believes that it is a superior store of value to traditional assets like gold. He also sees Bitcoin’s blockchain technology as a catalyst for innovation in various sectors, such as decentralized finance and voting systems.
MicroStrategy’s stock price has been highly correlated with Bitcoin’s price, as the company’s value has increased by over 290% since the beginning of 2023. This makes MicroStrategy an attractive target for investors who want to gain exposure to Bitcoin without buying the cryptocurrency directly.
The MSTR ETF is still pending approval from the U.S. Securities and Exchange Commission (SEC), which has been notoriously cautious about approving crypto-related ETFs. However, YieldMax is confident that its ETF will meet the SEC’s standards and will be able to launch in 2024.
The ETF is expected to attract a lot of attention from investors who are looking for a new way to invest in the crypto space, especially in the wake of the recent market volatility. The ETF will offer a unique opportunity to generate income from MicroStrategy’s Bitcoin exposure with a balanced risk strategy.
