MSTR vs. MSTY: A Tale of Capital Growth vs. Income Generation
Between April 2024 and April 2025, investors in MSTR (Strategy) and the YieldMax MSTR Option Income Strategy ETF (MSTY) took two very different approaches to gaining exposure to the performance of MSTR, with contrasting outcomes. One sought aggressive capital appreciation through Bitcoin exposure, while the other targeted steady monthly income via an options-based income strategy. Both funds track the performance of MSTR, but the differences in their investment structures and results are stark.
MSTR: A Bitcoin-Driven Growth Story
MSTR, once a traditional enterprise software company, has become a well-known Bitcoin proxy. As of April 2025, the company holds 531,644 BTC, which directly impacts the volatility and price movement of its stock. Since adopting its Bitcoin treasury strategy in 2020, MSTR shares have surged more than 2,500%. However, this growth comes with significant price swings, with the stock currently exhibiting an implied volatility of 87% and a historic 30-day volatility of 102%. As of mid-April 2025, MSTR is still 43% below its all-time high reached in November 2024, which is typical for Bitcoin-correlated assets. MSTR does not pay dividends, focusing purely on capital appreciation.
MSTY: A Synthetic Income Strategy with Limited Upside
MSTY, launched in April 2024, takes an income-oriented approach without directly holding MSTR shares. Instead, MSTY replicates MSTR’s performance through a combination of U.S. Treasury bills, cash reserves, and short-term call options on MSTR. By implementing a synthetic covered call strategy, MSTY sells call options on MSTR to generate consistent monthly income, but it limits the fund’s upside potential. This structure is designed for investors who value regular cash flow over capital gains.
Comparing the Performance: Growth vs. Income
For the period from April 4, 2024, to April 9, 2025, a $1,000 investment in each product showed the following results:
- MSTR: Riding on the back of a strong Bitcoin rally in 2024, MSTR delivered a remarkable return of +89%, growing the investment to $1,895.
- MSTY: While MSTY provided 13 monthly distributions totaling $36.53 (ranging from $4.13 in April 2024 to $1.33 in April 2025), reinvested on each ex-dividend date, the $1,000 investment grew to $1,591, providing a +59% total return.
Despite generating regular income, MSTY’s value dropped by 45% due to its exposure to MSTR’s price movements, which led to losses not fully offset by the income generated from call options. Moreover, the high monthly distributions, part of which were considered return of capital, contributed to a reduction in the net asset value (NAV) over time, further weighing on MSTY’s performance.
The Volatility Factor in MSTY
MSTY was not immune to volatility, often trading at a premium or discount relative to its NAV. This was due to both the fluctuating demand for the ETF and the volatility of MSTR itself. Initially, when MSTR’s volatility was high, MSTY experienced strong option premiums and price movements. However, as volatility decreased in 2025, premiums narrowed, and MSTY began trading at a discount more frequently. A potential resurgence in Bitcoin’s price and MSTR’s volatility could reverse this trend, boosting investor interest and option income once again.
Different Approaches: High Risk vs. Steady Yield
The key distinction between MSTR and MSTY lies in the type of returns they offer. MSTR is geared towards investors seeking high-risk, high-reward growth, driven by Bitcoin’s price movements. This investment strategy is ideal for those willing to take on significant volatility in pursuit of potentially large capital gains. On the other hand, MSTY is designed for investors focused on steady income through a derivatives-based income strategy, with predictable monthly distributions but limited growth potential due to the covered call strategy.
Unlike more traditional income strategies that focus on low-risk, stable assets like dividend-paying stocks or government bonds, MSTY is structured for investors who are comfortable with high risk in exchange for the potential of regular cash flow. This makes it appealing to retail investors looking for yield, but with an understanding of the inherent risk and volatility.
Concluding the Investment Story
Both products track MSTR’s price action but offer investors very different investment propositions. For those looking for aggressive growth linked to Bitcoin, MSTR is the clear choice. Meanwhile, MSTY caters to those who prefer a more conservative approach, seeking income over capital growth, though at the cost of higher risk exposure to MSTR’s volatile movements. Ultimately, the decision between MSTR and MSTY comes down to individual investment goals: whether seeking significant capital appreciation or regular, albeit riskier, income.
