This week's ETP listings brought us YieldMax's MSTR Option Income Strategy ETF, freshly listing in European markets. Because apparently, just buying MicroStrategy stock, which itself is essentially a leveraged Bitcoin play wrapped in a NASDAQ-listed business intelligence software company, was far too straightforward for sophisticated European investors.
For the uninitiated, MicroStrategy (MSTR) is technically a business intelligence software company. Technically. In the same way that your uncle who won't shut up about his crypto portfolio at Thanksgiving is technically still an accountant.
Under CEO Michael Saylor's leadership, MicroStrategy has transformed from “company that makes enterprise analytics software” to “company that sometimes remembers it makes enterprise analytics software between Bitcoin purchases.” As of early December 2024, they hold approximately 446,400 BTC, that's worth approximately $41.8 billion in Bitcoin, acquired at an average price of around $62,428 per coin. For context, the next-largest corporate holder is Marathon Digital with 40,435 BTC. MicroStrategy doesn't just lead the pack; they're in a completely different race.
The company's market cap sits around $75 billion despite generating less than $500 million in annual revenue. There simply isn't a traditional valuation metric that can explain this. It's like if your neighbourhood lemonade stand was valued at $7.5 million, sure, the lemonade is fine, but we all know you're really here for the Bitcoin stash hidden under the folding table.
Enter YieldMax, the covered call specialists who've built an empire selling option premium on volatile single stocks. Having already launched their US-listed MSTY product back in February 2024 (which quickly became one of their flagship offerings), they're now bringing the party to Europe via a new ETC listing.
Their MSTR product (ticker: MSTY on European exchanges) does exactly what you'd expect: it provides exposure to the US-listed YieldMax MSTR Option Income Strategy ETF, which buys MSTR shares and then systematically sells call options against them.
The pitch? Generate income while maintaining “exposure to the share price movements of MicroStrategy, subject to a limit on potential investment gains.”
Translation: you get to participate in MSTR's legendary volatility, but only up to a point. If Bitcoin, and therefore MSTR, goes parabolic, your upside is capped by those sold calls. If it crashes? Well, you still have the full downside exposure, though at least you collected some premium on the way down.
YieldMax proudly advertises distribution rates in the triple digits. Their most recent distribution for MSTY was 92.88% return of capital and 7.12% income. If you don't understand what that means, just know that “return of capital” is financial euphemism for “here's your own money back, but we're calling it income.” It's the ETF equivalent of taking $100 from your left pocket, putting it in your right pocket, and announcing you've made $100.
The strategy works brilliantly in sideways or slightly-up markets. In violently directional markets, which, let's be honest, describes every MSTR market since Saylor discovered Bitcoin, you're either leaving massive gains on the table or watching your investment decay like milk in the sun.
Let's trace the layers of abstraction here:
1. Bitcoin – A decentralised digital currency with no intrinsic value beyond network effects and collective belief
2. MicroStrategy (MSTR) – A software company that's abandoned its core business to become a leveraged Bitcoin accumulation vehicle, financed through aggressive share dilution and convertible debt
3. MSTY – An ETF that owns MSTR and sells covered calls on it, capping your upside while preserving your downside, now available to European investors who apparently felt left out of the American option-selling party
We've reached levels of financial abstraction that shouldn't be possible. It's like making a photocopy of a photograph of a painting of a photograph. Each layer adds noise, reduces fidelity, and introduces new ways to lose money, all while charging management fees.
The really wild part? This product will probably attract billions in assets. Because if there's one thing the ETF industry has learned, it's that investors have an insatiable appetite for ways to express Bitcoin exposure through increasingly baroque derivative structures, especially when you can market them as “income strategies.”
Michael Saylor has repeatedly stated that MicroStrategy will “never sell” its Bitcoin, that they'll “just keep buying the top forever,” and that “every day is a good day to buy Bitcoin.” He's essentially running the world's largest HODL strategy with other people's money.
And now? Now you can sell covered calls on the guy who won't sell. You can collect premium on the HODLer. You can turn the abstraction into income, or at least, 7.12% income and 92.88% return of your own capital.
It's turtles all the way down, except each turtle is made of Bitcoin, wrapped in a software company, wrapped in an ETC listed on European exchanges, and charging a 0.99% expense ratio.
The real question isn't whether this product makes sense, it objectively doesn't. The real question is: how long before YieldMax launches covered call products on their own covered call products?
META-OPTIONS, anyone?