MSTR vs. MSTY: Growth or Income? A 12-Month Faceoff

MSTR vs. MSTY: Contrasting Paths in Growth and Income for Bitcoin Enthusiasts

Between April 2024 and April 2025, investors in MSTR (Strategy) and the YieldMax MSTR Option Income Strategy ETF (MSTY) navigated two distinctly different investment strategies, each offering varying risk-return profiles. While MSTR targeted capital growth through exposure to Bitcoin (BTC), MSTY focused on generating steady income through options-based strategies. Though both are linked to MSTR’s performance, their structures and outcomes painted very different pictures over the past year.

MSTR: The Bitcoin-Powered Growth Play

Listed on the Nasdaq, MSTR has transitioned from an enterprise software company to a prominent Bitcoin proxy, holding 531,644 BTC as of April 2025. This makes the company’s stock highly sensitive to Bitcoin price fluctuations. Since adopting its Bitcoin treasury strategy in August 2020, MSTR shares have seen an explosive growth of over 2,500%. However, such growth comes with substantial volatility, as reflected by the stock’s implied volatility of 87% and its 30-day historic volatility of 102%. As of April 2025, MSTR is still 43% below its all-time high, which occurred in November 2024, reflecting the roller-coaster ride typical of assets that are closely tied to Bitcoin. Additionally, MSTR does not pay any dividends, focusing purely on capital appreciation.

MSTY: A Synthetic Income Approach with Covered Calls

In contrast, MSTY, launched in April 2024, offers an income-focused investment strategy. Instead of directly holding MSTR shares, MSTY replicates MSTR’s exposure through a combination of U.S. Treasury bills, cash reserves, and short-term call options on MSTR stock. The fund employs a synthetic covered call strategy, where it sells call options on MSTR to generate consistent monthly income. This strategy, while limiting potential upside from MSTR’s price appreciation, offers a reliable cash flow stream, which appeals to income-seeking investors.

Performance Analysis: MSTR vs. MSTY

From April 4, 2024, to April 9, 2025, the performance of a $1,000 investment in each product was as follows:

• MSTR: Riding the momentum of Bitcoin’s strong rally in 2024, MSTR’s investment grew to $1,895, delivering an 89% total return.
• MSTY: MSTY, with 13 monthly distributions totaling $36.53 (ranging from $4.13 in April 2024 to $1.33 in April 2025), reinvested at each ex-dividend date, saw the investment grow to $1,591, which translates to a 59% total return.

Despite the regular distributions, MSTY’s total return was significantly impacted by its exposure to MSTR’s downside. MSTY lost 45% of its value due to this exposure, and its synthetic covered call strategy prevented it from fully benefiting from the rallies in MSTR’s stock price. Additionally, the consistent monthly distributions — part of which were return of capital — led to a reduction in the fund’s net asset value (NAV) over time, further putting pressure on its share price.

MSTY’s Volatility and Market Premiums

MSTY also experienced significant volatility, with its price often trading at premiums or discounts relative to its NAV. This volatility stemmed from investor demand and fluctuations in MSTR’s price. In the early months, high volatility in MSTR supported strong option income and higher premiums, but as the market’s volatility subsided in 2025, these premiums narrowed and even shifted to discounts. If Bitcoin experiences another rally or MSTR’s volatility picks up, these dynamics could change, boosting both the option income and investor demand for MSTY.

Different Objectives: Capital Growth vs. Steady Income

The key distinction between MSTR and MSTY lies in their investment objectives. MSTR offers investors high-risk, high-reward growth potential, directly tied to the performance of Bitcoin. This strategy is designed for investors who are willing to ride out the volatility of Bitcoin’s price swings in pursuit of substantial capital gains. On the other hand, MSTY targets steady income generation through a derivatives-based income strategy. While the income is regular, the upside potential is limited due to the covered call strategy.

Unlike traditional income strategies that prioritize stable, low-volatility assets like dividend-paying stocks or broad market indices, MSTY is aimed at investors who are comfortable with higher levels of risk and volatility but want the appeal of consistent income. These investors are typically more inclined to accept the trade-off between steady cash flow and limited capital appreciation.

Both products cater to different investment appetites — one focused on Bitcoin-driven growth and the other offering a more predictable income stream with exposure to MSTR’s price movements. For investors looking for growth and high-risk potential, MSTR is the clear choice. For those focused on regular income, MSTY offers an option that balances risk with the potential for reliable cash distributions.

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