YieldMax ETF Basics
Everything you need to know to get started with high-yield income ETFs
What Are YieldMax ETFs?
YieldMax ETFs are a revolutionary family of exchange-traded funds that use covered call option strategies to generate high monthly income from popular stocks. Unlike traditional ETFs that focus on capital appreciation, YieldMax funds prioritize income generation through sophisticated options strategies.
Key Features
- ✓ Monthly distributions instead of quarterly
- ✓ Yields ranging from 30% to over 100% annually
- ✓ Focus on single-stock exposure with income
- ✓ Actively managed covered call strategies
- ✓ Available through standard brokerage accounts
How Do YieldMax ETFs Work?
YieldMax ETFs employ a sophisticated covered call strategy to generate income. Here's a simplified breakdown of the process:
📊 Example: TSLY (Tesla Income ETF)
- TSLY holds exposure to Tesla stock through synthetic positions
- The fund sells call options on Tesla weekly or monthly
- Premium collected from selling calls is distributed to investors
- If Tesla rises above the strike price, gains are capped
- If Tesla falls, the fund still collects option premiums
This strategy allows investors to receive consistent monthly income regardless of whether the underlying stock goes up, down, or sideways - though significant upside is sacrificed for this income.
Popular YieldMax Funds
| Ticker | Fund Name | Underlying | Typical Yield | Risk Level |
|---|---|---|---|---|
| MSTY | MicroStrategy Income | MSTR | 80-100% | Very High |
| TSLY | Tesla Income | TSLA | 50-70% | High |
| NVDY | NVIDIA Income | NVDA | 70-90% | High |
| APLY | Apple Income | AAPL | 20-30% | Moderate |
| YMAX | YieldMax Universe | Multiple | 30-40% | Moderate |
Benefits and Risks
✅ Benefits
- High monthly income potential
- Income in all market conditions
- Professional options management
- Liquid and tradeable like stocks
- No K-1 tax forms
⚠️ Risks to Consider
- Limited upside potential
- Principal can decline with underlying stock
- High volatility in fund prices
- Distributions can vary monthly
- Higher expense ratios than traditional ETFs
- Tax implications of high distributions
Who Should Consider YieldMax ETFs?
Ideal For:
- Income-focused investors seeking monthly cash flow
- Retirees looking to supplement income
- Investors comfortable with options strategies
- Those who prioritize income over growth
Not Suitable For:
- Long-term growth investors
- Risk-averse investors
- Those needing stable principal value
- Investors in high tax brackets (without tax-advantaged accounts)
Ready to Learn More?
Dive deeper into investment strategies or try our income calculator