ETFs, like TSLY, focus on generating high income through options strategies

From Nasdaq: 2025-07-03 09:23:00

Many ETFs now use options strategies to boost income, with some producing yields of 10% or more. YieldMax ETFs take it further, offering dividend yields of 30%, 40%, or higher. An extreme example is the YieldMax Tesla Option Income Strategy ETF, with a dividend yield of about 127% based on the past 12 months.

The YieldMax Tesla Option Income Strategy ETF uses U.S. Treasuries as collateral to buy and sell options on Tesla stock. The goal is to generate high income relative to risk. However, there are risks to consider, including inconsistent monthly dividend payments and the ETF’s downside bias if Tesla stock price rises.

YieldMax ETFs can outperform in flat stock markets, but the Tesla Option Income Strategy ETF may underperform over time due to potential losses. Consider if Tesla stock will remain in a narrow price range before investing in this ETF. It’s crucial to understand the risks and potential outcomes before making a decision.



Read more at Nasdaq: The TSLY ETF Is an Income Monster