I Believe Everyone Investing in ULTY Will Turn a Profit. Is My Understanding Correct?

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Is there such a thing as a can’t-lose proposition in the world of exchange-traded funds (ETFs)? The answer might seem to be yes, especially when we take note of the gigantic yield of the YieldMax Ultra Option Income Strategy ETF (NYSEARCA:ULTY).  

Surely, the temptation to take a YOLO (You Only Live Once) trade with the ULTY ETF is strong as the fund’s yield is huge. It feels like you can just sit back and hold the YieldMax Ultra Option Income Strategy ETF, and you’re guaranteed to turn a profit eventually.

On the other hand, seasoned investors know that there’s no free lunch in the financial markets. There are features of the YieldMax Ultra Option Income Strategy ETF that make it appealing, but there are also drawbacks that could turn a profit into a steep loss.

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Just “Hold and Relax”?

What prompted me to investigate the ins and outs of the YieldMax Ultra Option Income Strategy ETF was a recent Reddit posting. It suggests that ULTY’s net asset value (or NAV, which closely resembles the fund’s share price) “doesn’t matter” and that “everyone will eventually turn a profit” with ULTY “because the distributions you gain will eventually catch up with your initial investment amount.”

This argument could make sense at first glance. After all, the YieldMax Ultra Option Income Strategy ETF advertises a distribution rate (which is similar to an expected annual dividend yield) of 88.6%.

Plus, the ULTY ETF has been paying out its distributions on a weekly basis since March of this year. Consequently, if someone leveraged the compounding effect by reinvesting in shares every week, it seems possible to achieve 100% or greater returns in a year with the YieldMax Ultra Option Income Strategy ETF.

After gaining 100% of the share price from the weekly distributions, you’d be in a can’t-lose scenario — or at least, that’s what the argument might be. Would this line of thinking hold up in a real-life ULTY investment, though?

ULTY: Volatility Brings Opportunity

First and foremost, it’s essential to understand how the YieldMax Ultra Option Income Strategy ETF generates weekly income and enables such a high distribution rate. To sum it up, the ULTY ETF holds shares and/or trades options on a variety of stocks, some of which tend to be volatile.

These stocks, just to give you a representative sample, include Strategy (NASDAQ:MSTR), Affirm Holdings (NASDAQ:AFRM), newly minted member of the S&P 500 Applovin (NASDAQ:APP), Rocket Lab USA (NASDAQ:RKLB), Oklo (NYSE:OKLO), IonQ (NYSE:IONQ) and — ironically enough — Reddit (NYSE:RDDT). The YieldMax Ultra Option Income Strategy ETF uses covered-call selling and other options-trading strategies to extract substantial income from stocks like these.

With a few calculations, we can get an idea of how ULTY’s distributions can add up quickly even without the impact of reinvestment. Since the YieldMax Ultra Option Income Strategy ETF switched to weekly payouts in early March, I rounded to the nearest penny and added up all of the fund’s distributions from March 7 to Aug. 29.

The total that I got was $2.89 in total paid distributions during that time span. If the ULTY ETF’s share price was around $6.73 on March 7, then an investor would have collected 43% ($2.89 divided by $6.73) worth of distributions based on the share price at the point of purchase.  

That’s a tidy sum, to say the least. So far, it sounds like you just can’t lose with the YieldMax Ultra Option Income Strategy ETF. In a year or less, ULTY holders should collect 100% of their original investment in weekly distributions and after that, it’s all pure profits — right?

Always Read the Fine Print

I wish that it were as simple as “hold and relax” and enjoy the guaranteed profits with the YieldMax Ultra Option Income Strategy ETF. In a market where there’s no free lunch, investors should always read the fine print and weigh the drawbacks of any ETF.

While the YieldMax Ultra Option Income Strategy ETF uses covered-call selling to generate impressive income, those same strategies can drag down the ULTY share price. As YieldMax explains in the ULTY ETF’s prospectus, when writing (selling) covered calls, the fund “might limit its potential for capital appreciation in exchange for premium income.”

Hence, you could see the stock prices of Strategy, Affirm Holdings, Apploving, etc., rocketing higher but the ULTY share price might only move up slightly or go sideways. In some scenarios, the YieldMax Ultra Option Income Strategy ETF’s share price could drop rapidly.

Let’s see what this looks like based on recent price action. As of Nov. 4, 2025, the YieldMax Ultra Option Income Strategy ETF’s share price was approximately $5.45. If you had purchased the ULTY ETF at $6.73 on or around March 7, you would have lost $1.28 per share, which amounts to a 19% share-price loss.

An Uncertain Future With ULTY

Granted, someone who bought the YieldMax Ultra Option Income Strategy ETF on March 7 would still have come out ahead. He or she might have purchased ULTY at $6.73 and coughed up $1.28 in share-price losses, but also gained $2.89 in cash distributions.

The net gain, then, could have been $1.61 per share, or the equivalent of a 24% profit on the original $6.73-per-share investment. That’s still impressive, but remember that past performance doesn’t assure future returns.

So, tread carefully with the YieldMax Ultra Option Income Strategy ETF and monitor the share price carefully. Also, keep tabs on the fund’s distribution rate since it could change on any given day.

Additionally, it’s important to use a high-quality broker that allows you to trade stocks and ETFs like ULTY. This is a fundamental principle that can save you a whole lot of financial and emotional distress over the long term.

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