That 85% ‘Yield’ Lost 73% in a Year: The Weekly Payday Fund That Ate Its Own NAV
An 85% yield sounds like a dream until the fund paying it quietly returns your own money and calls it income. What happened to MSTY investors reveals a structural flaw hiding inside every eye-popping distribution rate.
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The YieldMax MSTR Option Income Strategy ETF (NYSEARCA:MSTY) was sold to income seekers as a way to harvest the wild volatility of Strategy (formerly MicroStrategy) as weekly cash. The pitch worked. MSTY briefly posted a trailing distribution rate north of 85%, and retail investors piled in expecting a lottery ticket that paid rent. What they got instead was a fund whose share price fell from a peak near $40 to $12.83, with a one-year price decline of 68.39% and a total return of roughly -72.7%, including all distributions paid. There is a cleaner way to run a weekly-income options strategy, and it lives one aisle over in the same product category.
Why Investors Bought MSTY in the First Place
A synthetic covered call on Strategy stock is what MSTY runs, selling short-dated calls against a synthetic long position and passing the option premium through as weekly cash. When MSTR grinds sideways with high implied volatility, that strategy tends to print money. That is precisely what played out in 2024, when MSTY paid distributions of up to $4.4213 per share on November 21 of that year. Annualize a handful of $3-plus payouts against a $20 share price, and the eye-watering yield that made MSTY a social media favorite starts to make sense.
Where the Strategy Broke
Covered calls cap upside and keep all downside. Strategy’s stock fell 74.91% over the past year, and MSTY’s synthetic position took the full hit while the sold calls expired worthless. The fund kept distributing, so the principal went out the door as “income.” Weekly payouts collapsed from that $4.42 peak in late 2024 to $0.2222 on July 30, 2026. The distribution rate still looks high because the denominator, NAV, fell faster than the numerator. A yield calculated on a shrinking base is a return of capital dressed up as income.
Retail investors took notice of the deterioration. A r/wallstreetbets post titled “Got liquidated but thankfully just under 25 so will never do this ever again” drew 610 upvotes and 397 comments in early July, and sentiment tracking across the sample window was classified as very bearish at every snapshot.
The Alternative: A Weekly-Pay Fund That Kept Its NAV
The Roundhill Innovation-100 0DTE Covered Call Strategy ETF (NYSEARCA:QDTE) uses the same weekly-distribution wrapper investors liked about MSTY, but writes zero-days-to-expiration calls against the Nasdaq-100 rather than a single high-beta stock. Diversification and same-day theta decay are the difference. Over the past year, QDTE’s price rose 27.19%, from $23.36 to $29.71, while it continued to pay weekly. MSTY holders received distributions and lost principal; QDTE holders received distributions and gained principal.
The mechanism matters. QDTE’s portfolio is 89.86% derivative exposure backed by a 4.01% government money-market position (FGXXX) and a 6.00% allocation to Roundhill’s Weekly T-Bill ETF. Losses on any single equity cannot vaporize the collateral, because the collateral is Treasuries. MSTY’s collateral is a synthetic long on one company whose stock can and did fall 75% in a year.
The Tradeoffs Worth Naming
No free lunch comes with QDTE. The fund caps the Nasdaq-100’s upside on each trading day, so it will trail the index during strong rallies. Its distributions also include a return-of-capital component, though on a materially smaller scale than the principal drain observed with MSTY. And QDTE gives up the specific bet on Strategy that MSTY holders originally signed up for. For an investor whose thesis is that MSTR is heading higher, direct MSTR exposure delivers that view more cleanly, while an option income wrapper keeps the downside and sells away the upside.
Making the Swap
In a taxable account, an MSTY position sold today likely carries a capital loss that can offset gains elsewhere; the wash-sale rule does not block a rotation into QDTE because the two funds do not track substantially identical securities. In a Roth or IRA, the swap is mechanical with no tax consequence. Investors who bought MSTY specifically for MSTR exposure should size QDTE smaller, since it is a broader index play.
What Would Change the Call
For MSTY to become interesting again, two things need to happen. Strategy stock would need to stabilize at elevated implied volatility, and the fund would need to stop distributing more than it actually earns. Neither condition is in place today. For investors whose original goal was weekly cash without watching their principal evaporate, QDTE offers the same wrapper appeal while eliminating the single-stock crater risk. The swap simply moves covered call income onto a base that has, so far, held its own.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
