YieldMax ETFs, particularly the YieldMax MSTR Option Income Strategy ETF, employ covered call strategies on volatile stocks, targeting exceptional yields, sometimes over 100%. However, while such high returns are enticing, they come with significant risks. Investors considering leveraging debt to optimize their investment must account for interest costs and the potential for net asset value erosion. The market's inherent volatility complicates the predictability of yields, necessitating thorough risk assessment, especially under bearish market conditions.
Borrowing to invest can supercharge returns but magnifies losses. MSTY's distributions at $1.47 per share may yield around $42,000 annually on a $50,000 investment.
Investors must consider the risks with leverage. MSTY's yield must consistently top 10% after taxes and fees to break even, given its volatility.
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