-
YieldMax Magnificent 7 Fund of Option Income ETFs (YMAG) and YieldMax Ultra Option Income Strategy ETF (ULTY) generate double-digit yields through synthetic covered call strategies that sell call options against underlying stocks, but both funds have experienced NAV erosion with YMAG down 7% year-to-date while Tesla (TSLA) fell 13% and Nvidia (NVDA) dropped 3%, with distributions increasingly comprised of return of capital rather than earned income.
-
The funds’ income depends on elevated volatility (VIX at 27.29) to generate option premiums, but when the VIX compresses below 15, premium income collapses and distributions shrink, creating a sustainability risk as investors gradually receive their own principal returned rather than genuine yield.
-
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
YieldMax Magnificent 7 Fund of Option Income ETFs (NYSEARCA:YMAG) and YieldMax Ultra Option Income Strategy ETF (NYSEARCA:ULTY) advertise something genuinely appealing: double-digit yields from some of the most-traded stocks in the world. YMAG wraps individual YieldMax covered call ETFs on all seven Magnificent 7 names into a single fund. ULTY targets even higher distributions across a basket of high-volatility holdings. Both pay weekly. Both carry yields that dwarf anything available from a money market or Treasury. And both are slowly returning your own money to you in the process.
Every YieldMax product runs a synthetic covered call strategy. The fund holds a position in the underlying stock and sells call options against it, collecting premium that gets paid out as distributions. The sold calls cap how much the fund participates in any upside move. When the underlying stock rallies past the strike price, the fund misses the gain, and the premium collected does not come close to compensating for that missed appreciation over time.
YMAG holds seven single-stock YieldMax ETFs in roughly equal weights, with each component (NVDY for Nvidia, TSLY for Tesla, and so on) running its own covered call overlay. Bundling seven stocks together feels like diversification, but it does not solve the underlying problem. Every component is capping upside and collecting premium, and the NAV decay mechanism runs in parallel across all seven positions simultaneously.
Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.