My Honest Opinion of the YieldMax MSTR Option Income Strategy ETF

Let's start with the uncomfortable truth: I own some shares of the YieldMax MSTR Option Income Strategy ETF (NYSEMKT: MSTY) in my IRA, and I'm starting to regret it.

I've been holding Bitcoin (CRYPTO: BTC) since 2014, keeping an eye on Strategy (NASDAQ: MSTR) since it started buying cryptocurrency in 2020. The MSTY ETF is just another way to buy Strategy stock, with a different set of risks and with advantages I don't really need. I should have known better, but there you go. I'm just another imperfect human, and maybe my moment of clarity can save you from making the same mistake.

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When leveraged Bitcoin isn't exciting enough

If Bitcoin is volatile, Strategy is Bitcoin on steroids. The company borrows billions and sells more stock just to buy more Bitcoin. This all-in tactic adds corporate risk, leverage risk, and governance risk on top of crypto's inherent volatility. You're no longer just betting on Bitcoin -- you're betting on chairman Michael Saylor's Bitcoin maximalist strategy and the company's ability to manage massive debt.

MSTY wraps this risky asset in a covered call strategy to generate monthly payouts, at the expense of rapidly falling MSTY share prices. Sure, you get monthly income from option premiums, but you're capping your price-based upside. It's like buying a sports car and agreeing never to drive above 55 mph.

The IRA angle almost makes sense

Holding MSTY in an IRA sidesteps one major drawback of its fundamental structure.

In a taxable stock brokerage account, those monthly distributions wouldn't count as dividends, because they are generated by trading stock options. They would be taxed as ordinary income -- potentially 37% federal plus state taxes. In my traditional IRA, they compound tax-deferred.

Plus, I can't hold actual Bitcoin in most retirement accounts, so MSTY provides crypto-adjacent exposure where direct ownership isn't possible. There are always spot Bitcoin exchange-traded funds, like the iShares Bitcoin Trust ETF (NASDAQ: IBIT), but that's still not exactly the same as buying Bitcoin.

My exit strategy from Strategy

But even so, I'm questioning my MSTY position. With DRIP enabled, my total returns have kept pace with MSTR so far, but why am I accepting capped upside from covered calls? If I'm bullish enough on Bitcoin to want IRA exposure, shouldn't I just own MSTR directly -- or a spot-price Bitcoin ETF?

So I might reshuffle my crypto holdings. The MSTY position doesn't make sense for me, and I don't want the adrenaline rush of Strategy shares. That cash should either move into an ETF or stay on the sidelines for a while. Maybe I have enough Bitcoin-adjacent exposure already, without the tricky MSTY fund.

This was an interesting experiment, but I'm done.

Anders Bylund has positions in Bitcoin, Tidal Trust II-YieldMaxTM Mstr Option Income Strategy ETF, and iShares Bitcoin Trust. The Motley Fool has positions in and recommends Bitcoin and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.