At first glance, the YieldMax Ultra Option Income Strategy ETF (NYSEARCA:ULTY) might look like the ultimate cash machine that could nearly double your money. Plus, the ULTY ETF’s payouts are very frequent, which allows for extra reinvestment and compounding possibilities.
Before you commit a large amount of capital to ULTY, though, you’ll definitely want to consider the disadvantages of this particular YieldMax fund. Indeed, there’s one major trade-off that could cause you to think twice about buying the YieldMax Ultra Option Income Strategy ETF.
Key Points
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The UTLY ETF offers an eye-popping yield and pays the shareholders every week.
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At the same time, investors should keep a close watch on ULTY as it’s vulnerable to share-prices losses.
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ULTY’s Playbook for Fast Passive Income
Two main features make the ULTY ETF popular in 2025. For one thing, this fund pays its shareholders
How could this ETF achieve such a huge annual yield? To sum it up, the YieldMax Ultra Option Income Strategy ETF capitalizes on the volatility of some fast-moving stocks and options based on those stocks. Some of these stocks include Microstrategy (NASDAQ:MSTR), Rocket Lab USA (NASDAQ:RKLB), Affirm Holdings (NASDAQ:AFRM), Oklo (NYSE:OKLO), Applovin (NASDAQ:APP), IonQ (NYSE:IONQ) and Reddit (NYSE:RDDT).
The ULTY fund does hold shares of these and other stocks, some of which tend to be volatile. Also, the YieldMax Ultra Option Income Strategy ETF deploys a variety of options-trading strategies; these can include synthetic long exposure to stocks, writing (selling) covered call options and/or credit spreads, and selling calendar call spreads.
One thing to know about the YieldMax Ultra Option Income Strategy ETF is that it automatically deducts 1.3% worth of annualized operating expenses from the share price. This will decrease your profits, if you have any, from the ULTY ETF.
Yet, that certainly seems like a small price to pay for the gigantic annual yield of the YieldMax Ultra Option Income Strategy ETF. It looks like you can almost double your money in a year’s time with ULTY, so what could possibly go wrong?
The Big Trade-Off
I already mentioned one issue with the YieldMax Ultra Option Income Strategy ETF, as this fund deducts operating expenses that are higher than many other ETFs. Another consideration is that ULTY’s currently advertised yield isn’t guaranteed to persist into the future.
The stock prices of Microstrategy, Rocket Lab USA, Affirm Holdings and others in the YieldMax Ultra Option Income Strategy ETF could fall sharply. If that happens, the ULTY ETF’s distribution rate might get cut.
Maybe you’re not concerned about that. After all, there was a scary stock-market pullback in April but the YieldMax Ultra Option Income Strategy ETF kept on paying its weekly cash distributions. The annual distribution yield might have changed, but it has remained high throughout 2025 so far.
There’s a serious trade-off that you shouldn’t ignore, however. While the ULTY ETF’s strategy of writing covered call options can generate significant income, it will also tend to “cap” or limit the fund’s share-price upside.
So, let’s say the stock prices of Microstrategy, Rocket Lab USA, Affirm Holdings, and others in the YieldMax Ultra Option Income Strategy ETF shoot higher. You might assume that the ULTY share price would also post substantial gains, right?
Don’t make any assumptions about this. The fund’s options-trading strategies could limit the potential share-price upside of the YieldMax Ultra Option Income Strategy ETF. Moreover, the ULTY ETF’s share price could actually decline even when some of the fund’s stock holdings rally.
Don’t Fall Asleep at the Wheel
The point is that the YieldMax Ultra Option Income Strategy ETF’s share-price losses could negatively impact an investor’s profit-and-loss status. It might surprise you to discover that, as of August 18, 2025, the ULTY ETF’s share price declined 46.6% over the past 12 months.
This is a trade-off that might cause cautious investors to lose interest in the YieldMax Ultra Option Income Strategy ETF. It’s not a set-it-and-forget-it fund where you can just buy ULTY and assume that you’ll earn a tidy profit.
It’s wise, therefore, to keep your position size small with the YieldMax Ultra Option Income Strategy ETF and to frequently monitor the share price as well as the distribution rate. Because of the fund’s benefits and risks, you might speed-run your gains with the ULTY ETF but you really can’t afford to fall asleep at the wheel.
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