TSLY Pays More Each Week Than NVDY but Holders Are Losing Money Faster

The YieldMax NVDA Option Income Strategy ETF (NYSEARCA:NVDY) and the YieldMax TSLA Option Income Strategy ETF (NYSEARCA:TSLY) are as close to a controlled experiment as retail exchange-traded funds get. Same issuer, same Tidal Trust II series, same synthetic-long-plus-short-call structure, same T-bill collateral, same weekly cash. The only variable is the underlying stock. That single difference produced a total-return gap of more than 30 percentage points over the past eight months, explaining why treating these two funds as interchangeable income plays misreads them.

For readers who want the mechanical plumbing, we covered how these YieldMax option-income wrappers work on July 30. The point here is what the strategy does when you swap the engine underneath it.

Same Machine, Two Different Fuels

Both funds hold Treasury bills as collateral and layer a synthetic long plus short calls on the reference stock. NVDY holds 20.6% in U.S. Treasuries and 11.5% direct Nvidia shares, wrapped in a rolling call ladder. TSLY is built almost entirely on Treasury bills, with roughly 23% weights across five separate T-bill CUSIPs collateralizing Tesla-linked options.

A call-writing program needs a steadily trending underlying to work. Premiums stay rich, the stock does not repeatedly gap past strikes, and the fund keeps most of its net asset value (NAV) intact. A violently two-sided underlying forfeits the upside tail while absorbing nearly all of the downside. Nvidia in 2026 has been the former case; Tesla has been the latter.

Where the Divergence Shows Up

NVDY is down 13.9% year to date and 23.7% over the trailing year, closing at $12.59 on August 20. TSLY is down 39.3% year to date and 41.6% over one year, closing at $22.06. Those figures are price-only. Add distributions and NVDY’s total return widens further, while TSLY’s headline payout barely offsets the NAV erosion.

Distribution Rates Versus Outcomes

NVDY’s annualized forward distribution is $1.44, with a trailing 12-month payout of $7.1285 and a most recent weekly of $0.12. TSLY’s annualized forward is $2.43, trailing 12-month is $14.313302, and the latest weekly is $0.2025. TSLY’s distribution rate looks fatter, but that is a rate on a shrinking base. The 2026 payouts dropped from $0.3658 in early January to $0.2025 in late August, tracking the NAV lower.

YieldMax prospectus language is explicit: distributions may include return of capital, and when distributions exceed total returns, NAV falls and future dollar payouts shrink with it. In a taxable account, that ROC reduces cost basis rather than representing real income.

Opportunity Cost Against the Underlying

Nvidia holders captured the AI rally directly. NVDY investors received cash but ceded the tail above the short strikes. Tesla shareholders rode a choppier tape that punished a capped-upside, uncapped-downside wrapper. The fund forfeited the rebounds and absorbed the drawdowns.

Head-to-Head Snapshot

Verdict

For an investor focused on monthly cash and willing to accept that the payout floats with the underlying, NVDY has earned its place in an income sleeve this cycle because Nvidia’s trend rewarded the call-selling engine. TSLY has not. Investors focused on total return have generally been better served by holding the underlying stock rather than the option-income wrapper. Investors seeking only income should understand that TSLY’s higher distribution rate has been partly funded out of its own NAV. What would flip the recommendation is a regime change: if Tesla enters a sustained uptrend and Nvidia chops sideways, the ranking reverses. The outcome here was driven by the underlying rather than the strategy.

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