High Yield, High Risk: The Truth About ULTY and MSTY

YieldMax lives up to its name with exchange traded funds (ETFs) that provide big yields and maximum payouts for investors. Two of this fund founder’s most talked-about high-paying ETFs are the YieldMax Ultra Option Income Strategy ETF (NYSEARCA:ULTY) and the YieldMax MSTR Option Income Strategy ETF (NYSEARCA:MSTY).

If everything goes according to plan, the shareholders of ULTY and MSTY should collect frequent, substantial cash distributions. However, plans can go awry and it’s difficult to predict the future with these mega-yield ETFs.

There’s no better time than right now to consider the risk-reward profiles of the YieldMax Ultra Option Income Strategy ETF and the YieldMax MSTR Option Income Strategy ETF. With a cautious mindset, today we’ll dissect these two YieldMax funds and think about whether it’s better to jump in or stay away.

ULTY’s Diversified Holdings and Weekly Payouts

First things first: you’re probably here because you’re interested in the supersized yields that YieldMax’s funds offer. You’ve come to the right place, as the YieldMax Ultra Option Income Strategy ETF currently advertised an annualized distribution rate of 88.51%.

To sweeten the deal, the ULTY ETF pays out its cash distributions on a weekly basis. This allows for extra reinvestment and compounding opportunities.

Another advantage of the YieldMax Ultra Option Income Strategy ETF is that, unlike some other YieldMax funds, ULTY is diversified. This particular fund’s stock and/or option positions include, among others, Applovin (NASDAQ:APP), Microstrategy (NASDAQ:MSTR), Reddit (NYSE:RDDT), IonQ (NYSE:IONQ), Affirm Holdings (NASDAQ:AFRM), Oklo (NYSE:OKLO), and Rocket Lab USA (NASDAQ:RKLB).

These stocks can be quite volatile sometimes, but the YieldMax Ultra Option Income Strategy ETF leverages this volatility to generate passive income. Indeed, the ULTY ETF employs a variety of options-trading strategies such as synthetic long exposure to stocks, writing (selling) covered call options and/or credit spreads, and selling calendar call spreads.

These strategies may be considered aggressive or at least highly ambitious. Yet, they enable the YieldMax Ultra Option Income Strategy ETF to extract massive yield from a diversified array of fast-moving stocks.

What Could Go Wrong With ULTY?

Don’t just look at the benefits of ULTY, though. There are concerns that might prompt you to think twice about the YieldMax Ultra Option Income Strategy ETF.

To start off, YieldMax isn’t a nonprofit organization. They charge 1.3% worth of annualized operating expenses (after a fee waiver), which will automatically be deducted from the ULTY share price.

Second, even if the YieldMax Ultra Option Income Strategy ETF advertises an 88.51% expected annual distribution rate today, this isn’t guaranteed for the future. YieldMax could cut its distribution rate tomorrow, next week, and/or any other time.

Perhaps the most serious risk is that the YieldMax Ultra Option Income Strategy ETF may be subject to share-price erosion. As of August 20, 2025, the ULTY ETF’s share price declined 48.98% during the past 12 months.

This goes to show that the YieldMax Ultra Option Income Strategy ETF’s covered call option strategies can limit the fund’s potential share-price upside. Sometimes, ULTY’s share price is vulnerable to steep drawdowns.

MSTY’s Bitcoin Angle and Gargantuan Yield

Turning to the YieldMax MSTR Option Income Strategy ETF, this YieldMax offering isn’t as diversified as the ULTY ETF. For the most part, MSTY is centered around Microstrategy stock, though it also holds U.S. government bonds.

Much like ULTY uses covered call option strategies to deliver high yields from a variety of stocks, the YieldMax MSTR Option Income Strategy ETF utilizes similar strategies to extract income from Microstrategy stock. As you may be aware, Microstrategy holds vast quantities of the cryptocurrency Bitcoin (CRYPTO:BTC).

Since the MSTY ETF has a cryptocurrency angle, it might appeal to Bitcoin enthusiasts seeking passive income opportunities. Amazingly, the YieldMax MSTR Option Income Strategy ETF features an 86.29% expected annual distribution rate as of August 20.

Furthermore, MSTY’s cash payouts occur on a monthly basis. That’s not as frequent as ULTY’s weekly distributions, but it’s still more frequent than the once-every-three-months schedule that dividend-paying stocks typically offer.

Minding the Downside Risks of MSTY

Unfortunately, the YieldMax MSTR Option Income Strategy ETF has similar drawbacks to the YieldMax Ultra Option Income Strategy ETF. As it turns out, MSTY’s 86.29% yield isn’t guaranteed in the future and could be slashed at any given moment.

Additionally, the YieldMax MSTR Option Income Strategy ETF deducts 0.99% worth of annualized operating expenses from the share price. This is an important consideration because these operating expenses can drag on an investor’s profit-and-loss profile over time.

Then there’s the share-price erosion of the YieldMax MSTR Option Income Strategy ETF. Sure, MSTY’s option-trading strategies can benefit from the volatility of Bitcoin and Microstrategy stock.

However, while the covered call option trading strategies of the YieldMax MSTR Option Income Strategy ETF can generate income, they also tend to limit the fund’s share-price upside potential. Like we discussed with the ULTY ETF, you might sometimes see the MSTY ETF’s share price fall sharply.

Checking in on August 20, the YieldMax MSTR Option Income Strategy ETF’s share price dropped 30.43% over the prior 12 months. That’s a hard pill to swallow when both Bitcoin and Microstrategy stock posted sizable price gains during that one-year period.

Staying Safe With ULTY and MSTY

Again, the YieldMax MSTR Option Income Strategy ETF is less diversified than the ULTY ETF and also pays out its distributions less frequently. All in all, as risky as ULTY can be, the MSTY ETF might be even riskier.

This isn’t to suggest that you can’t own the YieldMax Ultra Option Income Strategy ETF and the YieldMax MSTR Option Income Strategy ETF. It’s wise, though, to limit your exposure to these two ETFs.

To put it another way, investors can choose to only hold a few shares of ULTY and, due to its bigger risks, even fewer shares of MSTY. With this prudent plan in place, at least you might capture some big payouts without putting your portfolio in danger.

 

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