No Reason To Buy TSLY

seekingalpha04-20

YieldMax TSLA Option Income Strategy ETF has a dividend yield of 100% but has a negative total return and is not recommended for long-term investors.TSLY uses a combination of put writing, call buying...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2428484694?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-04-20 05:33","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2428484694","market":"us","top_or_hot":-1,"title":"No Reason To Buy TSLY","media":"seekingalpha","content":"<div>\n<p>YieldMax TSLA Option Income Strategy ETF has a dividend yield of 100% but has a negative total return and is not recommended for long-term investors.TSLY uses a combination of put writing, call buying...</p>\n\n<a href=\"https://seekingalpha.com/article/4684812-no-reason-to-buy-tsly\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>No Reason To Buy TSLY</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNo Reason To Buy TSLY\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-20 05:33 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4684812-no-reason-to-buy-tsly><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>YieldMax TSLA Option Income Strategy ETF has a dividend yield of 100% but has a negative total return and is not recommended for long-term investors.TSLY uses a combination of put writing, call buying...</p>\n\n<a href=\"https://seekingalpha.com/article/4684812-no-reason-to-buy-tsly\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2756315664.SGD","symbol_name":"ALLIANZ INCOME AND GROWTH \"AMI\" (SGDHDG) INC","start_time":0,"source_url":"https://seekingalpha.com/article/4684812-no-reason-to-buy-tsly","article_id":"2428484694","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2428484694","pubTimestamp":1713562404,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"YieldMax TSLA Option Income Strategy ETF has a dividend yield of 100% but has a negative total return and is not recommended for long-term investors.TSLY uses a combination of put writing, call buying","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2756315664.SGD":"ALLIANZ INCOME AND GROWTH \"AMI\" (SGDHDG) INC","LU0320765489.SGD":"FTIF - Franklin Mutual US Value A Acc SGD","BK4527":"明星科技股","LU0070302665.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","XYLD":"Global X S&P 500 Covered Call ETF","BK4588":"碎股","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H","BK4550":"红杉资本持仓","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","CMCL":"Caledonia Mining Corporation Plc","LU1861215975.USD":"贝莱德新一代科技基金 A2","CLF.AU":"Concentrated Leaders","BK4574":"无人驾驶","LU1861558580.USD":"日兴方舟颠覆性创新基金B","BK4551":"寇图资本持仓","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","BK4566":"资本集团","LU1548497426.USD":"安联环球人工智能AT Acc","LU0820561818.USD":"安联收益及增长平衡基金Cl AM DIS","BK4561":"索罗斯持仓","LU0006061336.USD":"Blackrock US Small and MidCap Opportunities A2 USD","LU2602419157.SGD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"AC\" (SGD) ACC","BK4581":"高盛持仓","LU2756315318.SGD":"ALLIANZ INCOME AND GROWTH \"AMG\" (SGDHDG) INC A","BK4099":"汽车制造商","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","TSLA":"特斯拉","OMF":"OneMain Holdings, Inc","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","BK4017":"黄金","FDN":"First Trust Dow Jones Internet I","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","GM":"通用汽车","BK4592":"伊斯兰概念","LU0056508442.USD":"贝莱德世界科技基金A2","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","TSLY":"YIELDMAX TSLA OPTION INCOME STRATEGY ETF","CLF":"克利夫兰克里夫","F":"福特汽车","BK4585":"ETF&股票定投概念","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","LU2063271972.USD":"富兰克林创新领域基金"},"translate_title":"没有理由购买TSLY","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XYLD":1,"GM":1,"F":1,"CMCL":1,"CLF.AU":1,"CLF":1,"OMF":1,"TSLA":1,"TSLY":1,"FDN":0.9},"content_text":"YieldMax TSLA Option Income Strategy ETF has a dividend yield of 100% but has a negative total return and is not recommended for long-term investors.TSLY uses a combination of put writing, call buying, and call writing to create a position in Tesla, limiting its income potential to only one security.TSLY's active management has not been effective, and investors would have been better off buying Tesla shares and writing calls themselves.Richard Drury/DigitalVision via Getty Images YieldMax TSLA Option Income Strategy ETF (NYSEARCA:TSLY) first came to my attention recently when I was checking out different funds under the \"income\" and \"yield\" nomenclature a few months ago. Now being quoted with a dividend yield of 100%, it's undoubtedly of interest to folks. TSLY Price History (Seeking Alpha) Coming in at $40 per share at its launch, it's now under $14, with a negative total return. This, however, is not a matter of poor timing with this fund and a brighter future ahead. Ultimately, I conclude that its very construct makes TSLY hard to justify as an existing ETF, and for any serious, long-term investor, they are better off looking elsewhere. Concept of the Fund TSLY makes a \"Frankensteined\" position in Tesla (TSLA) through a combination of actively managed put writing, call buying, and call writing. Q1 2024 Fund Report Instead of owning the shares outright, it writes puts on shares to create a bullish position. Now, put-writing is a pretty lucrative strategy in general because the secured cash can generate interest income in addition to the income from the premiums. Q1 2024 Fund Repost You'll also notice that calls are then purchased on top of this to make the Frankensteined position. This enables writing covered calls on TSLA in order to create the income indicated by the fund. The Fatal Flaw Now, from what I can see, the main flaw here is the inherently restrictive nature of the fund, since the income is meant to come from calls and must be tied to TSLA and not any other security. While I don't usually like to encourage options trading in my articles, it is something that I myself do because I have the time and comfort to do it, so I figured I'd give an example to explain better. Author's table Above are a few trades I've done over the last couple of weeks for shares of Cleveland-Cliffs (CLF), which I covered recently. Now, you'll notice my approach is simpler because I write puts and only write calls if assigned the shares from the put. Thus, I've not nailed to call-writing, but I make use of put-writing too. In this case, I was assigned 700 shares of CLF, and in two trades this week, I made most of the unrealized loss back (and again, it's only unrealized). Meanwhile, I have shares of a great company that isn't trouble to hold. I write options with other stocks I've covered, such as OneMain Holdings (OMF) and Caledonia Mining Corporation Plc (CMCL). Since these are companies that I have followed and am okay with holding at certain prices, it means I can have my pick of weekly or monthly option contracts while writing strike prices based on these companies' intrinsic values. YieldMax doesn't appear to create its ETFs with an eye to the intrinsic value of the securities. Indeed, its funds just appear to be based on stocks that are popular and trendy. YieldMax Website Moreover, if they are going to be actively managed, it begs the question of why they simply do not have a single fund that takes advantage of option-writing for all of those securities. The nature of options trading, in my view, is that it has to be opportunistic and based on what is a good premium at that point in time, relative to the stock's intrinsic value and other premiums out there. That's why I utilize calls and puts across multiple stocks. With that said, it might help to think more specifically about TSLA. How Does Tesla Impact This? I believe the fund might have a lot more going for it if Tesla were undervalued. Do I think it is? Well, let's look at a few things. Revenues and Cash Flows (Seeking Alpha) Measured in revenues or cash flows, Tesla is a growing company. During the time of this fund, TSLA has gone from having a market cap of over $900 billion to just under $500B now. Ford Revenues and Cash Flows (Seeking Alpha) Ford (F) has what I'd consider comparable sales and cash flows, and it's under $50B. GM Revenues and Cash Flows (Seeking Alpha) With General Motors (GM), we have somewhat larger numbers, with a similar valuation. Even if TSLA is still growing, a 10x valuation compared to other automotive companies who can also sell EVs doesn't make sense to me. There's a more nuanced discussion to be had about each of those companies, but it hits the key points for the sake of discussing TSLA and TSLY. TSLA is not worth that much more than these other companies. So no, I don't think TSLA is undervalued, even if it's down from $900B. Covered call funds have an easier time giving positive returns if the assets rise in value (which is hard for an overvalued asset to do), but Global X S&P 500 Covered Call ETF (XYLD), which I also covered, shows what happens when an income's fund has an asset that grows in value. Compared to TSLA Thus, it's not surprising that TSLA is down and that its returns have been negative since the launch of TSLY. Yet, curiously, TSLA is beating TSLY. TSLA and TSLY Total Returns (Seeking Alpha) Normally, a covered call fund would beat the underlying asset in a declining market. This is because the calls would tend to expire and compensate investors for the capital loss on the asset somewhat. That that hasn't occurred here shows that the active management is not working correctly. Owners of TSLY would have been better off buying TSLA, writing calls themselves, and saving the 1% expense ratio. As far as any investor who wants simple answers is concerned: There's not really a good excuse for this. Conclusion We live in a world where too many ETFs built on too many concepts exist. Covered call ETFs appear to be one of those. Taking an individual stock and just making a fund based on it is an interesting product to sell to investors, but the case of TSLY shows that it's not always going to do well for them.  Options writing is something that requires more flexibility and careful knowledge of the underlying companies, and the nature of this ETF precludes that advantage. This is why the 100% dividend yield is a warning and not an invitation; it's a sign of tremendous capital depreciation that drives the yield up and makes total returns even more negative than TSLA's. For that reason, and given the history of results so far, I'd prefer to keep my money in stocks like those I mentioned and write the calls myself.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2428484694"}