Summary Bitcoin's volatility presents an opportunity to maximize gains, particularly with the YieldMax MSTR Option Income Strategy ETF (MSTY). MSTY's call-option-selling strategy generates strong distributions, especially with MicroStrategy Inc.'s (MSTR) high implied volatility, making it an excellent vehicle for variable monthly income. The fund's recent near-doubling of AUM, with a forward yield potentially reaching 130% amid ongoing market volatility. Upgrading MSTY from Hold to Buy due to its impressive return metrics and the likelihood of sustained high options premiums driven by high volatility. In my recent article called MSTX: Take The Risk, Make The Gains , I made a case for Bitcoin ( BTC-USD ) breaching $100k and heading toward two key levels. The first of these was $123k, as predicted by Binance's crowdsourced forecasting tool . That figure has significantly dropped at the time of this writing down to $99k, indicating fears that the rally of the past month won't hold. However, there's also a $200k BTC price target from Bernstein from earlier this year that's still valid, in my opinion. More so, in fact, now that we know which way the political winds driving crypto adoption and regulation are likely to blow. Regardless of the ultimate price of Bitcoin after this extremely important period in its history, there's a way to take advantage of the volatility that we're currently seeing, and one of the ideal vehicles for that is the YieldMax MSTR Option Income Strategy ETF ( MSTY ). Remember that $100k BTC is a powerful psychological level, so why not use the opportunity to maximize your gains on the back of the volatility that it is causing? Besides, since my last article on MSTY in May 2024, the total return has been an incredible 90%, with the price return at a mere 4%, so the distributions seem to be really attractive. I believe it'll only get better because of the call-option-selling strategy that the ETF uses works really well when the underlying is volatile, which I discuss in the next section of the article. To be clear, that's not to say that MSTX has poor returns, but that ETF is not designed as a long-term holding; it's a daily 2x leverage play, where you need to carefully time your entry and exit points. Both use derivatives to achieve leverage, but MSTY focuses more on generating distributable cash, unlike MSTX, which tends to deliver stronger results on the price front, and for much shorter holding periods not exceeding a few days at a time, at the most. MSTY, on the other hand, is a buy-and-hold ETF that generates outsized distributions using call-writing as its main strategy. Both ETFs can handsomely complement a core holding of MSTR, so it's also a way of hedging against downside risks, especially if your MSTR holding is a significant portion of your portfolio. Why Call Option Selling is an Excellent Volatility Play The base assumption for my updated thesis on MSTY is that selling calls on a rising stock - the underlying stock being MicroStrategy Inc. ( MSTR ) - is an enticing way to generate income. Let's be clear that such income is never stable, and you'll see that variance in the monthly payouts . This is not a strategy for fixed income investors. YieldMax ETFs That being said, it's an excellent strategy for generating a variable monthly income, and the strategy becomes even more effective when the underlying security is facing volatility - and MSTR is certainly volatile right now, if nothing else. Market Chameleon calculates that MSTR's "current IV (226.5) is 78.9% above its 20 day moving average (126.6) indicating implied volatility is trending higher " and that "implied volatility (226.5) is currently 117.3% above the 252 day HV (104.2) mean." This kind of volatility, which MSTR has seldom seen, presents a ripe opportunity for selling calls. In MSTY's case, these are represented by November and December 2024 calls at strikes ranging from 610 to 890. The synthetic long position was created using a collar with Feb 2025 call and put contracts at a strike of 315, which both caps the upside as well as increases the likelihood of the put contracts expiring worthless. Regardless, the premiums generated on the sold calls have been very strong due to the increased volatility of the underlying. I believe that will remain the status quo until we have more clarity on the direction of Bitcoin and where Trump's presidency will lead it, so that gives investors a lead time of at least a couple of months that should hypothetically see BTC-USD rally further or go into a temporary consolidation phase, which I touch on later. The challenge now is the psychological barrier of $100k, but that challenge is also an advantage as far as this strategy is concerned, because the 180-day implied volatility of BTC-USD is currently above 60% , which we haven't seen since about September 2024. BTC-USD IV - The Block This higher-than-normal volatility is positively influencing the premiums that MSTY can get for underwriting these contracts, which is likely why we're seeing higher distributions right now. I don't see a problem for them to stay at these levels while the high volatility persists. From a forward yield perspective, Seeking Alpha data shows about 60%, but that only assumes an average monthly payout of a little over $2. The last two payouts, however, were both above $4, so on the optimistic side, using that as the run rate translates to a forward yield of 130%. Not too shabby. Closing Thoughts Data by YCharts As you can see, the fund has nearly doubled its AUM in the past couple of months alone, indicating strong investors interest. That's among the many buy signals thrown off by this ETF, not to mention the extraordinary distributions. The last time I wrote about MSTY was in May 2024, when it had an extrapolated forward yield of just 19%. Today, that figure is at 130%, and it's not unreasonable to expect this to continue. The fact that a crypto-friendly president is taking the oath in two months gives me confidence that options premiums will remain elevated. Of note is that we may have already entered a consolidation phase, which I suspect will be short-lived. TradingView One particular indicator needs some attention here: the SOPR or Spent Output Profit Ratio. SOPR is simply a measure of whether total BTC transactions on the last day was at a profit or at a loss. Anything above 1 means investors collectively transacted BTC at a profit, which could be a sign of profit-taking. BGeometrics However, it seems like longer-term BTC holders, as indicated by the LTH-SOPR (" Long Term Hodler SOPR "), are not cashing out as aggressively as earlier this month, when BTC breached $90k for the first (and second) time. That's a definite bullish sign that they expect another rally from here, presumably once a breakout is established over $100k BTC. The overall SOPR indicator at a slightly elevated 1.2 shows that some profit is definitely being taken off the table, but it's more pronounced among longer-term holders. Or hodlers, if you prefer. It's open to interpretation, of course, but these indicators tell me that a lot of profit has been taken off the table at $90k BTC, but that the market is now getting ready for a significant move up. MSTY's 0.99% expense ratio looked a little expensive to me when I first wrote about the ETF, but now that we have more data on the return metrics, I think it's very reasonable. As such, I'm upgrading my rating from Hold to Buy.
