NAV erosion isn't a flaw — it's the engine. Why? Because: If NAV didn’t erode, the fund would be compounding a 40–60% yield — which is mathematically impossible to sustain over time. NAV must drop to offset the premium extraction. That’s the trade-off: You’re harvesting future upside now as income.
Yet the YieldMax ETFs keep having to hold reverse splits. Take a look at TSLY with 1-for-2 reverse stock split on February 26, 2024. These splits cannot be considered good for investors -- they are a sign of declining price (nav) and a struggle to prop the ETF above a price necessary to implement the strategy (and to stay listed in the long term).
I think it was explained in the video, hence the return on capital, 98% last month, but everything gets squared away eoy for tax reporting purposes They trust their models and they trust their skill sets that their projections of income matches their monthly distributions hence monthly distributions of income, not dividends YieldMax has many products but the thread is msty, it's difficult enough for this one topic...
OK, they are in cs. Diagonalized with ITM longs in June and short upside calls and cs in May, weeklies. I mean it's dumb as the deeps shouldn't be diagonalized but they probably do it thinking their will be some vega in the Junes if the mkt drops. But diagonalizing serves the purpose of recycling the June vol when the May stuff rolls off; so the "replication" changes as they will be all June (for June). I doubt that they are rolling into July at end of May. Eventually, they'll need to add July vols. They are definitely ~2X long below 390 though. It could be structured much better.
They are over-reliant on June vega as the mkt drops to compensate for delta pos. Into the tails it gets wrecked but people are stupid and it will still probably trade at a prem.
Don't overthink it D! Just jump on the bandwagon...if I can do it I'm sure they can do it. I think I found a prospectus that went into detail on their actual trading strategies... I'll see if I can find it again.
However when the price of MSTY approaches $10 then it will also endure a reverse split. This milestone will come sooner than many expect. Fundamentally if the ETF is not above 10 bucks then the ETF is unable to implement its strategy -- plus the ETF will drive towards a low price where it will be delisted over time.