MSTY’s $1.57 Monthly Payments Can’t Offset Share Price Collapse

Core Insights - The YieldMax MSTR Option Income Strategy ETF (MSTY) generates income by selling covered call options on MicroStrategy (MSTR) stock, with distributions reliant on option premiums and MSTR's volatility rather than the company's fundamentals [2][3] Group 1: Income Mechanism - MSTY allocates approximately 59% of its assets in U.S. Treasury notes yielding between 3.88% and 4.25%, providing stable collateral [3] - The fund employs structured call spreads on MSTR, selling call options to collect premiums while purchasing protective calls at higher strikes [3] - The fund launched in February 2024 when MSTR's beta reached 3.43, indicating more than three times the market's volatility [3] Group 2: Performance and Distribution - MSTR's stock price dropped 53% over the past year, from $360 to $171, while MSTY declined 45% during the same period [4] - Despite total distributions of $18.86 in 2025, MSTY investors faced net losses due to share price depreciation [4] - Monthly payments from MSTY decreased by 56%, from an average of $3.57 in 2024 to $1.57 in 2025 [5] Group 3: Volatility and Sustainability Concerns - The payment structure shifted from consistent monthly distributions to smaller, more frequent weekly payments starting in October 2025, with some payments as low as $0.14 [5] - The fund appears to struggle in generating sufficient premium income as MSTR's price has collapsed [6] - MicroStrategy faces significant challenges, including three securities fraud class action lawsuits, a $5.91 billion unrealized loss on digital assets, and a 72% miss on quarterly earnings estimates in Q3 2025 [6]