MSST attempts to generate monthly income by selling options on MicroStrategy (MSTR), the volatile Bitcoin proxy stock, while targeting 25% of MSTR's upside. It's essentially monetizing MSTR's extreme volatility through a covered call strategy with a synthetic long position.
How It Works
The fund uses a synthetic covered call approach: buying MSTR exposure through options or swaps, then selling call options to generate premium income. The '25' target means it aims to capture roughly 25% of MSTR's price appreciation while harvesting option premiums. Monthly distributions come from option income, not MSTR itself (which pays no dividend). The strategy resets monthly, adjusting strike prices based on MSTR's movement.
Key Features
- Targets 4% yield from MSTR volatility despite MSTR paying zero dividends
- Provides indirect Bitcoin exposure with income, unlike holding BTC or MSTR directly
- Monthly distribution schedule funded by option premiums on one of the market's most volatile large-caps
Risks
- MSTR can drop 50%+ in weeks during crypto crashes — the 25% upside cap won't cushion these falls
- If MSTR rockets up 100%+, you only get 25% while still eating the full downside
- Complex derivatives strategy could malfunction during extreme volatility, potentially missing distributions
Who Should Own This
Best for yield-hungry investors who want Bitcoin-adjacent exposure but need current income — think retirees intrigued by crypto but needing monthly cash flow. Also suits traders betting MSTR will trade sideways or down, since the option income provides a cushion. Absolutely not for anyone expecting to capture Bitcoin's full upside potential.