"Earlier this summer, a colleague who is always on the hunt for juicy returns took a daring plunge: he sank nearly $200,000 into three YieldMax ETFs: the YieldMax Meta Option Income ETF (NYSEARCA:FBY), the YieldMax MSFT Option Income Strategy ETF (NYSEARCA:MSFO) and the YieldMax Palantir Option Income Strategy ETF (NYSEARCA:PLTY), in pursuit of their astronomical yields. Inspired by the YieldMax Ultra Option Income Strategy ETF ( NYSEARCA:ULTY ), which boasted an eye-watering 84% annualized yield, he saw these funds as a fast track to passive income nirvana. Over seven weeks, his experiment delivered thrilling payouts, gut-check volatility, and a crash course in the risks of high-yield ETFs that every investor should heed."
"My colleague isn't new to investing, but the mechanics of YieldMax ETFs hooked him. Unlike traditional dividend stocks, FBY, MSFO, and PLTY use covered call strategies, selling options on single stocks - in this case ), respectively - to generate hefty income. FBY capitalizes on Meta's tech-sector volatility, MSFO leverages Microsoft's steady growth, and PLTY rides Meta Platforms ( NASDAQ:META ), Microsoft ( NASDAQ:MSFT ), and Palantir Technologies ( NASDAQ:PLTR Palantir's wild, meme-stock-like swings. Today, their annualized distribution rates are still staggering: roughly 47%"
A colleague invested nearly $200,000 in three YieldMax covered-call ETFs—FBY, MSFO and PLTY—chasing extremely high distribution rates inspired by ULTY's 84% annualized yield. The funds generate income by selling call options on individual stocks such as Meta, Microsoft and Palantir, producing sizable monthly cash distributions. Over seven weeks the position delivered notable payouts but also sharp volatility and material downside exposure. The experience demonstrates that headline yields can be eye-catching while underlying option strategies, market swings, and position-specific risks can erode principal and complicate long-term retirement planning.
Read at 24/7 Wall St.
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