From Nasdaq: 2024-09-18 06:11:00

High-performing Magnificent Seven stocks have not been ideal for income investors due to lack of dividends. ETF provider YieldMax now offers stock-specific ETFs like the YieldMax NVDA Option Income Strategy ETF and TSLA version with dividend yields of 84% and 77% respectively. These funds use options strategies to generate income.

YieldMax ETFs don’t directly own underlying stock but buy Treasury securities as collateral to create options spreads. Two strategies are employed: selling call options to generate income and selling an at-the-money call option while buying out-of-the-money call option for upside potential. These strategies focus on income generation with some upside in stock performance.

However, these ETFs are best suited for stocks that rise gradually with low volatility over time. Nvidia’s stock price increased by 168%, while the YieldMax NVDA ETF only saw a 5% increase. Tesla stock declined by 17%, causing the YieldMax TSLA ETF to decline by 55% despite dividends. This highlights the importance of carefully considering investment decisions.

Investors should be cautious when considering an investment in Tidal Trust II – YieldMaxDA Option Income Strategy ETF. It is important to assess all factors and options before purchasing. The Motley Fool Stock Advisor team has identified 10 stocks they believe will bring significant returns in the future, but Tidal Trust II – YieldMaxDA Option Income Strategy ETF did not make the cut. Stock Advisor service has consistently outperformed the S&P 500 since 2002.



Read more at Nasdaq: These 2 Magnificent 7 ETFs Have Unheard-Of Dividend Yields of 84% and 77%