YieldMax TSLA Option Income Strategy ETF (TSLY)
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TSLY: Strategic Guide To Selling Tesla Call Options
The YieldMax TSLA Option Income Strategy ETF is unsuitable for income investors due to its inherent principal decay and declining distributions over time. The TSLY ETF can offer strategic value in specific market conditions, particularly given Tesla's low S&P 500 correlation. TSLY's performance hinges on reinvesting distributions; using them as income leads to permanent capital losses, but it will outperform in flat markets.
Why TSLY Is Not The Best Choice
YieldMax introduced covered call ETFs on single stocks like Tesla and Nvidia, offering high monthly distributions of up to 103% annually. Despite high distributions, YieldMax ETFs have lower returns than underlying stocks, with risk characteristics not significantly improved by writing call options. TSLY, the most actively traded YieldMax fund, underperformed on a risk-adjusted basis in both bull and bear markets, leading to a Strong Sell rating and better alternatives for investors.
TSLY: 50% Yield On Tesla
YieldMax TSLA Option Income Strategy ETF offers a high distribution yield tied to Tesla option premiums. TSLY uses a synthetic covered call strategy to generate income from Tesla shares. TSLY's total return since inception is -4.19%, with investors recouping 57% of their initial investment so far.
TSLY: Hidden Dangers Of Chasing High Yield
YieldMax TSLA Option Income Strategy ETF is a one-stock covered call fund with a 51.45% distribution rate, but distributions have fallen by 40% over the past year. The fund generates income through options and selling shares, leading to dwindling distributions and a risk of an eroding asset base. Investors should be aware of the risks of holding TSLY, including single stock risk, volatility risk, and unnecessary taxes from the fund returning capital.
TSLY ETF: Is this dividend paying Tesla stock a good buy?
The YieldMax TSLA Option Income Strategy ETF (TSLY) ETF has been an expensive strategy to lose money in the past few years. It has crashed by almost 50% in the past 12 months while the Tesla stock has crashed by 7.37% and the S&P 500 has jumped by over 26.57%.
