NVDA
NVIDIA
-- 110.570 AVGO
Broadcom
-- 179.450 TSLA
Tesla
-- 263.450 PLTR
Palantir
-- 80.460 MRVL
Marvell Technology
-- 72.280 
Analysis of options strategy ETF
Before we begin the main text, please be clear: In the market, apart from the most basic government bonds and money market funds, there are hardly any risk-free arbitrage opportunities. Low returns do not necessarily correspond to low risk, but high returns definitely correspond to high risk.
I believe that stock market investment is an impossible triangle: low risk, high returns, short time. Only two of these three can exist at the same time. Even for investment geniuses with extremely high market timing accuracy, they can only increase the probability of the third aspect occurring, rather than completely defying this rule. For retail investors like us, the simplest and most effective method is to trade time for space, buy and hold, take longer time, lower risk, and eventually achieve high returns. Please always remember:Never hand over your principal without fully understanding the risks of an investment, even when you see enticing high returns.
Returning to the main topic, I believe that TSLY and other YieldMax individual stocks covered call ETFs are not suitable for simple buy and hold. It is almost impossible to rely solely on TSLY for stable income. $YieldMax TSLA Option Income Strategy ETF (TSLY.US)$ $Tesla (TSLA.US)$
The distribution rate of tsly is above 50%. Although it can continue to collect premiums in volatile and bear markets, two things to remember:
1. The price of premiums collected is closely related to the price of tsla, the lower the stock price, the lower the premiums. Reference can be made to ko $Coca-Cola (KO.US)$ and mcd $McDonald's (MCD.US)$ iv, which are almost identical; however, mcd's option price is much higher than ko, this is due to the difference in stock price.
2. Although tsly sells slightly otm covered calls, it will continue to generate premiums for investors during an uptrend, while the principal will be continuously eroded. This leads to tsly falling along with tsla plunges, but not rising with tsla. You desire dividends, but the principal is being eroded, giving these covered call buyers during the uptrend.
To give an example, let's assume you are a fund manager who wholeheartedly serves clients without charging any management fees, returning all covered call premiums to clients. Simultaneously, for calculation convenience, you hold 1k shares of tsla stock (synthetic long position in etf). At the beginning of the month, tsla stock price is 100, you open 1k contracts of otm 5% monthly options, i.e., a covered call with a strike price of 105 in a month, with each premium of 3. By the end of the month, the stock price becomes 110. Your current assets are 110k (stock assets) - 3k (premiums to clients) - 2k (loss from closing covered calls) = 105k. To maintain a zero debt, you need to sell a portion of the stock, leaving you with a final stock holding of 954.5 shares of tsla stock, and the capital invested in this part will not return regardless of tsla's increase or decrease.
If you believe that tsly's capital erosion rate will be smaller than the rate at which premiums accumulate in your hands, in other words, tsla is expected to remain in a volatile market in the long term, with the oscillation range always smaller than market predictions, then tsly is an investment target for you. However, if you do not expect the future situation to be a volatile market, then you should still be cautious about investing in options strategies as a target.
The above analysis applies to all individual stocks and index covered call targets. $NEOS S&P 500 HIGH INCOME ETF (SPYI.US)$ $Global X S&P 500 Covered Call ETF (XYLD.US)$ $SPDR S&P 500 ETF (SPY.US)$
I will analyze other options strategies etf in the article in the future, including sell put, iron condor, and box spread. If my article is helpful to you, please like, follow, and leave comments. Thank you!
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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TenPlus : Thanks for sharing, it's very meaningful! Please tell me, it uses a synthetic covered call and didn't buy TSLA directly, so where exactly would you lose it?
TridentRodent OP TenPlus : When closing the same short call, you need to close a portion of the long call+short put together, and then buy a synthetic long with a higher bid price
Ginvest : Thanks for sharing. If retirees want to protect their principal and have a certain monthly dividend, what ETFs should they pay attention to? (Your suggestions are not investment recommendations; don't worry about liability). I'm currently heavy on mostly, gooy, aply, jepi, spyi, and qyld (I only learned that my capital was damaged today)
HUXB2020 : Thanks for sharing.
If according to your calculation, as the principal amount continues to be lost and cannot be recovered, then after a year, with a 90% dividend rate, the principal amount will be exhausted in about a year.
How long would it take to fully consume the principal amount if it wasn't used up in a year?
Let's say Tesla stock keeps rising.
thanks
SRK2024 : How about QQQI?