YieldMax AMZN Option Income Strategy ETF

AMZY

Market cap $274M

YieldMax's extensive suite of exchange traded funds (ETFs) have a large and dedicated following, and there are a number of reasons for this.

The YieldMax AMZN Option Income Strategy ETF offers synthetic long exposure to Amazon and high monthly income via a call option strategy. AMZY could appeal to investors bullish on Amazon's cloud and AI-driven data center growth, seeking high yield and willing to accept NAV volatility and risk. The YieldMax AMZN Option Income Strategy ETF could do well in an environment of strong hyperscaler-driven CapEx growth.

AMZY offers high yield via synthetic covered calls on Amazon, but this comes with risks to NAV and principal during market downturns. The fund's income and total returns have been strong, yet slightly underperform AMZN due to options friction and a 1.17% expense ratio. AMZY's risk is mitigated by Amazon's solid fundamentals, but its valuation is fair, not cheap, making downside possible if multiples contract.

I strongly believe investing is about making your money work for you. When I invest in any asset, I look for the ways it will grow my money, and one of the most important is dividends.

The skepticism surrounding YieldMax ETFs is related to their high level of risk. However, it's fine to own YieldMax funds as long as you stick to certain de-risking guidelines.

YieldMax's suite of high-yield ETFs could produce substantial monthly income. However, investors need to be watchful as these monthly-paying funds come with risks.

The AMZY ETF will attract Amazon stock optimists with it's super-high yield and monthly distributions, but there are risks to think about.

AMZY offers high yield and Amazon exposure, but its total return slightly outpaces AMZN with less downside risk since inception. The fund's high distributions are increasingly funded by return of capital, leading to NAV/share erosion and raising sustainability concerns. AMZY is suitable for tactical, short-term income seekers, but not as a long-term substitute for Amazon stock or for passive investors.

AMZY offers a massive distribution yield funded by a synthetic options strategy but comes with significant downside risk and capped upside versus AMZN shares. Despite price declines, total returns (including distributions) have kept pace with AMZN. Distributions are largely return of capital, providing tax efficiency, but can fluctuate with market conditions and Amazon's share price volatility.

The YieldMax AMZN Option Income Strategy ETF (AMZY) will tempt Amazon stock bulls with its gigantic yield.