MSTR vs. MSTY: A Year of Divergence in Strategy and Returns

Between April 2024 and April 2025, investors following MSTR (Strategy) and the YieldMax MSTR Option Income Strategy ETF (MSTY) found themselves on two vastly different investment journeys — one oriented toward capital appreciation through Bitcoin (BTC) exposure, and the other focused on generating income with options-based strategies. Although both investments are linked to the performance of MSTR, their strategies and outcomes diverged significantly over the course of the year.

MSTR: A Bitcoin Proxy With Wild Fluctuations

MSTR, which originally began as an enterprise software company, has transformed into a de facto Bitcoin proxy. As of April 2025, the company holds 531,644 BTC, making it highly sensitive to Bitcoin’s price movements. Since MSTR adopted its Bitcoin treasury strategy in August 2020, the stock has surged by over 2,500%, but it has also endured extreme volatility. MSTR’s implied volatility is currently 87%, with a 30-day historic volatility of 102%. Despite significant growth, the stock is 43% below its all-time high in November 2024, highlighting the dramatic swings typical of assets that are highly correlated with Bitcoin. Notably, MSTR pays no dividends, focusing on growth rather than income.

MSTY: A Synthetic Income Approach

Launched in April 2024, MSTY provides a contrasting investment approach. Instead of directly holding MSTR stock, MSTY replicates exposure through U.S. Treasury bills, cash, and short-term call options on MSTR. By using a synthetic covered call strategy, MSTY generates monthly income by selling call options on MSTR, offering a steady stream of cash flow. While this strategy limits the upside potential of MSTR’s price movement, it delivers consistent income, making it attractive to investors seeking regular distributions.

Investment Results: MSTR vs. MSTY

From April 4, 2024, to April 9, 2025, the performance of a $1,000 investment in each of the two products was as follows:

• MSTR: Benefiting from Bitcoin’s strong rally in 2024, the investment grew to $1,895, yielding an 89% total return.
• MSTY: With 13 monthly distributions totaling $36.53 (ranging from $4.13 in April 2024 to $1.33 in April 2025), reinvested at each ex-dividend date, the investment rose to $1,591, producing a 59% total return.

However, MSTY faced significant challenges. Despite generating consistent income, MSTY’s value dropped by 45% over the year due to its full exposure to MSTR’s price fluctuations. The call-writing strategy prevented MSTY from fully capitalizing on MSTR’s price rallies, and the high monthly distributions — partially classified as return of capital — eroded the fund’s net asset value (NAV), weighing on its share price.

MSTY’s Volatility and Premium/Discount Fluctuations

MSTY exhibited notable volatility in its pricing, often trading at premiums or discounts to NAV, introducing additional price risk. Early in the year, high volatility in MSTR supported strong option income and premiums. However, as MSTR’s volatility eased in 2025, these premiums narrowed and discounts began to appear more frequently. Should Bitcoin experience another surge or MSTR’s volatility increase, there’s potential for a rebound in premiums, option income, and investor demand.

Distinct Investment Goals: Growth vs. Income

While both MSTR and MSTY are tied to MSTR’s performance, they are designed for different investment objectives. MSTR provides an avenue for investors seeking high-risk, high-reward growth potential driven by Bitcoin, while MSTY focuses on delivering regular income through its derivative strategy, offering more predictable cash flow but limiting capital appreciation.

MSTY is not a typical income strategy that focuses on stable, low-volatility assets like dividend-paying stocks or broad-market index funds. Instead, it caters to retail investors who seek higher-than-usual income streams, but are willing to accept the volatility and risk inherent in the options market. It provides an intriguing income alternative for those comfortable with the increased risk compared to more traditional investment approaches.