YieldMax's New ETF Can Capitalize on Tesla Volatility | ETF Trends

On Thursday, the YieldMax Short TSLA Option Income Strategy ETF (CRSH) was added to YieldMax’s library of ETFs.

The fund has two objectives in mind. First, it seeks to provide investors with current income. Second, CRSH aims to acquire inverse indirect exposure to Tesla’s common stock. YieldMax noted the fund neither directly invests in Tesla, nor does it directly short Tesla’s stock performance.

CRSH has a net expense ratio of 0.99% and is actively managed. To accomplish the fund’s objectives, it implements a synthetic covered put strategy on Tesla. Simultaneously, CRSH seeks short, indirect exposure to Tesla’s current share price.

Inverse Exposure

To curate synthetic short exposure, CRSH writes call options on the underlying security. Simultaneously, the fund purchases put options in an effort to replicate inverse exposure to Tesla’s share price. Through the combination of selling call options and buying put options, CRSH intends to equal roughly -100% of the movements within Tesla’s share price, according to the fund prospectus.

In using a synthetic covered put strategy, the fund can acquire additional income from option premiums. As collateral for the put strategy, CRSH will also hold short-term U.S. Treasury securities. Both the U.S. Treasury and put option distributions can provide monthly income to investors.

This strategy opens up the potential for CRSH to gain in instances where Tesla’s share price decreases. In instances when Tesla’s share price starts rising sharply, the ETF purchases OTM call options to mitigate potential losses.

“Tesla has been one of the more volatile stocks in 2024. This new ETF provides an opportunity to earn income and make a negative call on the stock. We have seen strong interest in long versions of these options ETFs,” VettaFi Head of Research Todd Rosenbluth noted.

Currently, YieldMax has 24 different ETFs listed in the U.S. These funds account for more than $2.4 billion in assets under management.

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