#Investing in US stocks can lead to wealth. Everything has two sides.
TSTY and NVDY are ETFs issued by YieldMax based on options strategies. Their maximum loss risks mainly include the following aspects:
1. **Market Risk**
If the stock prices of Tesla (TSLA) and Nvidia (NVDA) on which TSTY and NVDY are based respectively, drop significantly, the value of the ETF will also decline, leading to potential significant losses for holders.
Volatility risk, although options strategies can bring profits, if the market volatility is severe, it may affect the effectiveness of the options strategy, leading to a decrease in expected returns, or even losses.
Risks of options strategies.
Covered call strategy, TSTY and NVDY generate additional income by selling call options. This strategy works better when stock prices remain stable or moderately rise. However, if the stock price increases significantly, ETF will be forced to sell stocks at a price lower than the market, missing out on further gains.
With the loss of time value, the value of options will decrease as time passes. If the market is not favorable to the options sold, the fund may not receive the expected options income.
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4. Leveraging Risk (if applicable)
Amplify losses, if the etf uses leverage (such as some YieldMax ETFs), losses will be magnified in a market downturn. For ETFs without leverage, losses are relatively lower, but still...