YieldMax’s NVDY limits upside by selling monthly call options, capping returns during NVIDIA’s sharp rallies.
The YieldMax NVDA Option Income Strategy ETF (NVDY) has captured just 56% of NVIDIA’s 62% trailing-year gain, underperforming during periods of rapid appreciation. The fund sells monthly call options on NVDA to generate income, capping upside potential for shareholders.
NVDY holds a mix of U.S. Treasury securities, NVIDIA stock, and synthetic long positions via options. While the strategy delivers a headline distribution yield above 50%, it exposes investors to missed gains when NVDA rallies sharply. Distributions are taxed as income, unlike NVIDIA’s long-term capital gains.
The fund’s design limits exposure to NVDA’s upside, particularly during high-growth phases, as short calls expire deep in the money during surges.