MSTR vs. MSTY: A Tale of Two Investment Strategies
From April 2024 to April 2025, two distinct investment paths were followed by investors in Strategy (MSTR) and the YieldMax MSTR Option Income Strategy ETF (MSTY) — one seeking capital appreciation tied to Bitcoin (BTC), and the other focusing on generating monthly income through options-based strategies. Though both are linked to the performance of MSTR, their structures and outcomes significantly diverged.
MSTR: A Bitcoin Proxy
MSTR, listed on the Nasdaq, has shifted from being an enterprise software company to acting as a de facto Bitcoin proxy. As of April 15, MSTR holds 531,644 BTC, making the stock highly sensitive to Bitcoin’s price fluctuations. Since adopting a Bitcoin treasury strategy in August 2020, MSTR’s shares have surged by over 2,500%. However, this impressive growth is accompanied by volatility: the stock has an implied volatility of 87% and a 30-day historical volatility of 102%. At present, MSTR is trading 43% below its all-time high of November 2024, reflecting the characteristic sharp swings seen in Bitcoin-correlated assets. Notably, MSTR does not pay a dividend, positioning it purely as a capital appreciation investment.
MSTY: Income via Synthetic Exposure
In contrast, MSTY, launched in April 2024, is designed as an income-focused ETF. Unlike MSTR, MSTY does not directly hold MSTR shares. Instead, its portfolio is composed primarily of U.S. Treasury bills, cash, and short-term call options on MSTR, allowing it to replicate exposure to MSTR without owning the stock. MSTY employs a synthetic covered call strategy, selling options on MSTR to generate monthly income. While this limits upside participation, it provides a consistent cash flow, making it appealing to investors who prioritize regular income distributions.
Performance Breakdown: MSTR vs. MSTY
Between April 4, 2024, and April 9, 2025, a $1,000 investment in each product yielded the following results:
- MSTR: Benefiting from Bitcoin’s strong rally in 2024, the investment grew to $1,895, achieving a total return of +89%.
- MSTY: Through 13 monthly distributions, totaling $36.53 (ranging from $4.13 in April 2024 to $1.33 in April 2025) and reinvested on each ex-dividend date, MSTY reached $1,591, resulting in a +59% total return.
However, MSTY faced a 45% decline over the year due to its full downside exposure to MSTR’s price movements. The fund didn’t fully capture MSTR’s rallies due to its call-writing strategy. Furthermore, the consistent monthly distributions, some classified as return of capital, eroded the fund’s net asset value (NAV), weighing on its share price.
Premiums, Discounts, and Volatility in MSTY
MSTY exhibited significant volatility, often trading at premiums or discounts to its NAV, which added an extra layer of price risk. Initially, high volatility in MSTR supported strong options income and premiums, but as volatility decreased in 2025, premiums narrowed, and discounts became more frequent. A renewed Bitcoin rally or an increase in MSTR’s volatility could reverse this trend, boosting option income, distributions, and demand from investors.
Distinct Investment Roles: Growth vs. Income
Both MSTR and MSTY are influenced by MSTR’s price action, but they serve distinct investor needs: MSTR appeals to those seeking high-risk, growth-oriented exposure tied to Bitcoin, while MSTY is designed to deliver income through a derivatives-based strategy, albeit with inherent limitations on capital appreciation.
Unlike traditional income strategies, which focus on low-volatility investments like index ETFs or dividend-paying stocks, MSTY targets retail investors seeking higher-than-usual income. However, this comes with the caveat of significantly higher risk and volatility, making it an attractive yet more speculative choice for income-seeking investors.
