MSTY: $5B Covered Call ETF Rides Income Strategy Mania

The YieldMax MSTR Option Income Strategy ETF (MSTY) has quietly become an ETF juggernaut in 2025 as retail investors flock to the fund in pursuit of eye-popping yields on one of the market’s most volatile cult stocks.

Launched in February 2024, MSTY has grown its assets under management to $4.8 billion, up from $1.5 billion at the start of the year. It’s pulled in $3.9 billion of net inflows in 2025 alone, more than any other single-stock ETF and even ahead of the $3.7 billion that’s gone into the Direxion Daily TSLA Bull 2X Shares (TSLL).

MSTY: A Bitcoin Proxy Wrapped in a Covered Call ETF 

MSTY’s appeal stems from its connection to Strategy (MSTR), formerly MicroStrategy Inc., the software firm turned Bitcoin mega-holder. Under executive chairman Michael Saylor, MicroStrategy has acquired a staggering 582,000 Bitcoin, worth over $63 billion at current prices (~$108,000 per coin).

Originally known for enterprise software, the company has effectively transformed into a leveraged Bitcoin holding company using a mix of stock sales and convertible debt to accumulate crypto. That pivot has sent MSTR shares soaring: up almost 3,000% since the company began buying Bitcoin in 2020 and 359% in 2024 alone.

The mania has created a massive premium in MicroStrategy stock. The firm’s enterprise value is now around $120 billion, nearly double the value of its Bitcoin holdings. 

That premium has been key to the company’s playbook, letting MicroStrategy issue new shares to buy more Bitcoin in a way that boosts value for existing shareholders (but raises the risk for new ones).

Selling the Sizzle

MSTY tries to capitalize on MSTR’s wild volatility by selling monthly call options that are 0%-15% out of the money. It’s a covered call strategy: synthetic long exposure to the stock combined with short calls to generate income.

The tradeoff for investors in the ETF is straightforward—you collect juicy option premiums, but you cap your upside if the stock surges.

The options premiums are why MSTY can boast a distribution yield north of 90%, a number that, while technically accurate, reflects the volatile nature of the underlying stock rather than a stable cash flow stream.

The fund is actively managed and may occasionally employ a covered call spread strategy—selling a call and simultaneously buying a farther-out call. This approach offers a more balanced trade off between upside potential and income, though it typically results in a lower yield than a plain covered call.

Great for Yield, Not Great for Returns

Despite its explosive asset growth, MSTY’s performance hasn’t fully kept pace with MSTR itself. Since its launch in early 2024, MSTY is up 208%, while MicroStrategy shares are up 306%.

So far in 2025, MSTR is up 31% year to date versus a 27% gain for MSTY.

That performance gap illustrates a key challenge of covered call ETFs tied to volatile single stocks: You give up a lot upside in exchange for yield (while still being exposed to the downside). 

Covered call strategies tend to outperform in flat or modestly bullish markets where volatility remains elevated but the stock doesn’t make massive directional moves. In surging markets, you're capped. In plunging ones, you're still long and feeling the pain.

Retail Loves the Yield

For many retail investors, the appeal of MSTY seems to be as much psychological as financial. MicroStrategy has become a meme-adjacent Bitcoin proxy, and MSTY offers a way to earn big yields off that exposure.

But the big headline yields may be distracting investors from the more important number: total return. And in that category, MSTY has consistently lagged the underlying stock.

The fund may continue to draw flows, especially as long as interest in Bitcoin—and in Saylor’s high-conviction strategy—stays hot. 

But it raises an important question: What’s the point of a covered call ETF on a volatile single stock? 

If you’re truly bullish on a company like MicroStrategy and expect explosive upside, why cap your gains just to collect short-term income?