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All Encompassing Investment and Financial Planning Thread for the Surly 99.5%


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Posted

For the guys who jumped into ULTY, its better to consider it more of a hedge fund. They are typically invested in 15 different underlying stocks at a time, along with options contracts. There's not one single underlying fund they are focused on like it is for MSTY above with MSTR. In fact MSTY and MSTR used to be two of the funds invested in whenever the IV rate was higher.

Posted
59 minutes ago, StassneyHorn said:

It's all about the income generation for me and it allows me to spread out risk. This can let people retire early, retire from full time and go into part time work, have income while they travel the world etc. Every four weeks I know I can log into fidelity and have $1200+ being deposited from MSTY and I can use it, reinvest, buy underlying, or spread the investment around. I'm in about 8 others as well and every Friday, two of them pay me. I've bought the underlying twice at 450 and in the 480s--the absolute worst timing. I have not made money on the small investment into MSTR in my world, but have been better at throwing money into MSTY and receiving the distributions for a MUCH better total return. The dividend comes through options premiums and the synthetic positions created that track the underlying fund activity that has been pretty monstrous part for them as well. I don't have to sell any shares like I would with the underlying to get my money, that I'm in the red on.

While it's nonqualified and taxed as income, the firm is able to be creative about how they label ROC to create tax advantages for those who hold in individual accounts- if you have it in a Roth you're golden. ROC used as a tax tool and will eventually lower cost basis to 0, so it helps being a long term holder. There's a big misconception online about Return of Capital as they provide estimates monthly that aren't particularly accurate, but true it up for end of year statements. The CEO and fund manager have said these funds are meant to be compounding monsters rather than sucking up all the monthly payout to live on. Best to know what your number is for monthly income needed to live and spread across multiple funds and overpay quarterly taxes if you can afford it seems to be the best online strategy. They've only been around 2.5 years as a company, so nobody is an expert. Video below expands on it and can answer a ton of questions if you're considering.

 

Yeah, timing on entry points surely affects the comparative returns on MSTY vs MSTR, but my suspicion is that on average MSTR performs better than MSTY over most time frames.

image.png.b8f602e5900903d423c080c813700ba1.png

If however I choose the 2024 high for MSTR (11/20/24) as the start date of a comparison through today, than the MSTY edges out the return of MSTR. And if you look at the worst performing period of MSTR (11/20/24-04/08/25), MSTY also performs better

image.png.220b3d74484e8ff6d6f3c0eb851af94e.png

So small sample size, but it appears that when the underlying is moving bigly, and IV spikes, the options selling ETF performs better than the underlying. In periods of normal low volatility, the underlying will probably always performs better. Which makes sense because the options premiums the ETFs  can capture are lower. 

Ive been trying to mess around with ChatGPT more to automate shit, so I spent a bit of time this afternoon building a model that allows me to dump price data, dividend data, volatility etc... and have it compare returns assuming dividend reinvestment. Now I can dump in data from a lot more of the options selling ETFs to see what shakes out. Is there an IV sweet spot for the underlying that starts to throw the advantage towards the options selling ETFs? Its really more just an exercise to practice using AI and I'm not expecting to learn much more than higher IV = better performance on the ETFs. 

Posted (edited)

Big spikes help alot and I'll always love it when I see it, but there's capped upside to the fund when you blow through the weekly contracts and can't get them sold before busting. If you could go up to the edge of the lowest contract's strike price and sell out of the money on Friday afternoon, that's a great week. On days when there's a small loss or underlying is flat, you usually do a small percentage better as the time premium kicks in on the time decay of the contracts.  If the underlying shoots up and has a 8-10% day, I'll take that as well but you get diminishing returns. It makes more sense to view the investment like a weekly football game that you already sunk your money into, and after 4 weeks you calculate your net results.  

If the funds live long enough, you will make house money. Some will be a long wait, some may do it in under a year. TSLY has been a wild ride that I'm glad I'm not on, but I'm also in on CONY which is their fund that has a Coinbase underlying and it's been maddening.

Edited by StassneyHorn
Posted
19 hours ago, Blotto said:

Stupid question time on the concept of these option income ETFs. While I'm nominally familiar with MSTY, I haven't really done a deep dive but what am I missing? It appears to me that you would be better off just investing in MSTR, or at least that has been the case since the inception of MSTY...

image.thumb.png.d919c9dbf4db29ee4b32291a6077265e.png

While the chart above doesn't specifically indicate whether it is showing MSTY dividend reinvestment, I believe it does as I found a separate charting tool that specifically claims to factor in dividend reinvestment, and it provides very similar returns for $10K invested starting 2/22/24. 

I understand that one major difference between the two investments is the monthly income generation that MSTY provides and MSTR does not (assuming you dont take profits  by selling some). But it seems a strategy of holding MSTR and selling after a year would provide far better returns, especially when you consider that you will be paying tax on your MSTY dividend payouts according to your tax rate, rather than lower long-term capital gains rate on MSTR if you hold a year.

I spot checked a couple of other ETFs (TSLY/TSLA, NVDY/NVDA) and in both cases the underlying outperformed the ETF fairly significantly.  Is the theory that these option income ETFs will out perform the underlying stock in periods of down years? 

Here's the sites I used to generate the returns

https://portfolioslab.com/tools/stock-comparison/MSTY/MSTR

https://totalrealreturns.com/s/MSTY,MSTR

 

Not really.  The theory is that having access to your capital in a streamlined manner will enable you to allocate the income dollars to other things without having to tap into principle.  It increases your personal Velocity of Money and allows your dollars to do more than one job.  

I built a model with about 25% of the portfolio in various YieldMax funds, 45% in PULS, 10% each in VOO, IBIT, and TLT/ZROZ split, and have what amounts to a stable value portfolio running a 14% yield.  I've taken that yield and used it to expedite debt re-payments, insurance premiums, etc.  At the lowest point of the market (early to mid april), that portfolio was down about 6% on principle vs the nearly 20 that the market was down for a period.  It's not fully flat yet, but i'm still well ahead on total return and have a much more streamlined cash flow structure to show for it.  

  • Hook 'Em 2
Posted
On 7/28/2025 at 10:51 AM, StassneyHorn said:

I’ve said plenty and there is major institutional investment occurring now. Dividends are announced every Wednesday morning from the activity that took place Monday through Friday of week before. They release daily transactions and holdings every single day, and they have people tracking gains/losses, AUM increases and new shares. 

This transparency is going to contribute to the downfall. They can be counter traded. Prices can be moved by other entities to where they lose money. With this burst in retail interest, I'm sure hedge funds and other traders are now looking at how to capitalize on it.

 

On 7/26/2025 at 5:54 PM, StassneyHorn said:

And when I say “you” above, I mean the options traders who have been molded on the cigarette ash of Rick Santelli and bonus paychecks to jump into the Chicago river to make the drunk managing director laugh. True vets of the game.

You should read about Long Term Capital Management. The best and the brightest. Nobel Prize winners. Had a great couple of years. Ended in the first big Wall St bailout.

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