TSLY ETF

YieldMax TSLA Option Income Strategy ETF has historically underperformed, but recent political developments involving Elon Musk's increased influence have led me to upgrade it to a hold. Trump's election win and Musk's potential role as "Efficiency Czar" could boost Tesla's business, indirectly benefiting TSLY through increased volatility. TSLY is suitable for bullish but cautious investors seeking high income, though conservative investors should avoid single-stock covered call funds like TSLY.

The YieldMax TSLA Option Income Strategy ETF (TSLY) ETF jumped by 8.135% in the extended hours after Tesla published strong financial results and provided an exciting update of its business.  Similarly, the closely-watched Direxion Daily TSLA Bull 2X Shares ETF (TSLL) ETF jumped by 24% to $11.18.

YieldMax TSLA Option Income Strategy ETF offers a high yield of 124% by trading options on Tesla stock, but carries risks in volatile markets. TSLY's strategy involves writing covered calls and credit call spreads on TSLA, complemented by investments in short-term U.S. Treasuries. Despite high distribution yields, TSLY has delivered a negative ROI of -14% since inception, underperforming TSLA's 13% ROI.

Tesla (TSLA) and Nvidia (NVDA) stocks have done well in the past few days as American equities bounced back. Tesla has jumped by over 33% from its lowest point in August and is slowly nearing its highest point this year.

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.

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.

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.

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.

The YieldMax TSLA Option Income Strategy ETF offers a high dividend yield of 100%, but its overall return is negative, making it unsuitable for long-term investors. TSLY employs a mix of put writing, call buying, and call writing to focus solely on Tesla, limiting its income opportunities to one stock. The fund's active management has not yielded positive results, and investors may have been better off purchasing Tesla shares and writing calls on their own.