DIV 301Lesson 5 of 60 of 6
Single Stock Option Income ETFs
Covered call funds built on one volatile stock, and why their yields look so enormous.
What you’ll learn
- How single stock option income funds are built without owning the stock
- Why their yields reach 30%, 50% or even more than 100%
- What has happened to their share prices, compared with the stocks they track
- Why reverse splits keep appearing in these funds' histories
Some of the most searched for income funds of recent years pay yields that sound impossible: 50%, 80%, sometimes over 100% a year, often paid weekly. They’re built on a single, very volatile stock such as Tesla, Nvidia, Coinbase or Strategy (formerly MicroStrategy). This lesson explains how they work and shows, with live data, what has happened to the people who bought them.
How they’re built
Most of these funds don’t own the stock at all. They build a synthetic covered call:
- Hold Treasury bills as collateral.
- Buy a call and sell a put on the stock at the same strike. Together, these move almost exactly like owning the shares.
- Sell shorter dated calls above the price, collecting premium.
- Pay out the premium (and T-bill interest) as distributions, often weekly.
The result behaves like a covered call on the stock: capped upside, nearly full downside. Some funds hold a mix of several volatile stocks, and some are funds of these funds, but the engine is the same.
Why the yields are so high
Option premium grows with volatility. A typical large company might have an implied volatility of 20% to 30%. These stocks often run at 50% to over 100%. A one-month call 10% above the price on a stock with 80% volatility can pay 5% or more of the stock price, every month.
The trouble is the asymmetry. Volatile stocks make their money in a handful of huge up months. The fund caps every one of them, while taking most of every down month. Add volatility drag (big swings eat compounding, as shown in The Risks of Ultra High Yield ETFs) and a payout set high, and the share price tends to bleed.
What actually happened: fund vs stock
Each table starts the fund and the stock it tracks on the same day, the fund’s first day in Dividend Duel’s data. “Cash return” adds every distribution to the price change, without reinvesting, which is how most holders take them.
| Fund | Since | Price change | Paid out (per $100) | Cash return |
|---|---|---|---|---|
| TSLY Feb 2024: 1-for-2 reverse split; Dec 2025: 1-for-5 reverse split | Nov 2022 | -88.7% | $98 | +8.9% |
| TSLA | Nov 2022 | +106.7% | $0 | +106.7% |
| Fund | Since | Price change | Paid out (per $100) | Cash return |
|---|---|---|---|---|
| NVDY | May 2023 | -34.6% | $207 | +172.5% |
| NVDA | May 2023 | +736.0% | $2 | +738.0% |
| Fund | Since | Price change | Paid out (per $100) | Cash return |
|---|---|---|---|---|
| CONY Dec 2025: 1-for-10 reverse split | Aug 2023 | -89.9% | $172 | +82.0% |
| COIN | Aug 2023 | +137.7% | $0 | +137.7% |
| Fund | Since | Price change | Paid out (per $100) | Cash return |
|---|---|---|---|---|
| MSTY Dec 2025: 1-for-5 reverse split | Feb 2024 | -84.2% | $224 | +139.8% |
| MSTR | Feb 2024 | +130.6% | $0 | +130.6% |
The pattern is consistent. Each fund’s share price fell sharply, in several cases by 80% to 90%, often while the stock it tracks rose. Counting every distribution, some holders still came out ahead in cash terms, but every fund trailed simply owning the stock, frequently by a very wide margin. The big monthly checks were real; a large part of them was the investors’ own capital coming back.
Reverse splits
When a fund’s price falls from $20 to $2, it often does a reverse split: ten old shares become one new one, and the price jumps back to $20. Nothing about your investment changes, but the history shows how far the price fell. Several of these funds have done one or more, listed under the tickers above. Dividend Duel adjusts all prices and payouts for splits, so the comparisons stay fair.
Simulate one yourself
Set the stock’s volatility high, the distribution rate near what these funds pay, and press New market a few times. Then try lowering the distribution rate to see what it takes to keep the share price steady.
The current lineup
| Ticker | Name | Forward yield | Trailing 12M yield | 1Y total return | 1Y price change |
|---|---|---|---|---|---|
| TSLY | YieldMax™ TSLA Option Income Strategy ETF | 52.87% | 80.63% | -4.2% | -45.8% |
| NVDY | YieldMax™ NVDA Option Income Strategy ETF | 34.75% | 54.16% | +27.5% | -22.7% |
| CONY | YieldMax™ COIN Option Income Strategy ETF | 67.11% | 124.95% | -43.6% | -73.5% |
| MSTY | YieldMax™ MSTR Option Income Strategy ETF | 96.61% | 136.71% | -46.7% | -77.3% |
| ULTY | YieldMax™ Ultra Option Income Strategy ETF | 58.98% | 92.52% | -5.9% | -52.6% |
| YMAX | YieldMax™ Universe Fund of Option Income ETFs | 40.47% | 61.15% | +0.4% | -39.8% |
| Before buying one, ask | Why |
|---|---|
| Would I own the underlying stock outright? | You take nearly all of its downside |
| Am I comfortable trailing it badly if it soars? | That's what the cap does |
| What does the fund's total return since launch look like? | The only honest scoreboard |
| How much of the distribution is return of capital? | See the fund's distribution notices |
| How big a share of my portfolio is it? | Many investors cap any single ultra high yield fund at a few percent |
Check your understanding
4 questionsHow do most single stock option income ETFs get exposure to the stock?
Why can these funds pay distributions of 50% or more a year?
A fund's share price has fallen 85% since launch while the stock it tracks has more than doubled. What does that most likely show?
Why do some of these funds carry out reverse splits?
Related lessons
Put it into practice
This lesson is for education only and isn’t financial, investment or tax advice. Tickers are used as examples of how things work, not as recommendations. Figures marked as live come from Dividend Duel’s market data and change daily. See our disclosure.