Summary CONY's high yield is driven by a covered-call strategy on Coinbase, but the share price has declined over 60% since inception. Current market conditions—low implied volatility and unfavorable Bitcoin seasonality—make covered-call selling less attractive for CONY. I'm bullish on Bitcoin long-term due to ETF inflows, institutional adoption, and reduced exchange supply, but June seasonality tempers my enthusiasm. I rate CONY a sell, Coinbase and Bitcoin a hold, citing systematic strategy risks, low volatility, and seasonal headwinds for CONY. The YieldMax COIN Option Income Strategy ETF ( CONY ) sells covered-call on Coinbase stock and distributes the premia proceeds to holders. This distribution currently annualizes into a 123.31% rate. However, this isn't a yield in the traditional sense where usually some kind of relatively steady profit is disbursed. Like with REITs or MLPs or leveraged fixed-income CEFs or things like that. The graph below illustrates this effect and how the share price went down over 60% since inception while the yield lead to a positive total return of ~109%: Data by YCharts A low triple digit return since inception is very good. However, I'd caution this is driven in part by the strong return of the underlying. The return profile is relatively favorable to sell covered calls. I'm also apprehensive of what's essentially a mechanical covered-call selling strategy. Selling more calls as money pours into the ETF: Data by YCharts This could potentially depress call prices, which is to the strategy's disadvantage. Last time I wrote about CONY I said: This time, I think there is a chance the underlying will be surprisingly strong in April and that makes it unfavorable to sell short-term calls against it. I’ll detail why I think Coinbase could do well during April. and I’m wary of the Coinbase seasonal data because it usually holds its earnings call in March, but the next one is coming up at the end of April. I think April could be a lot better this time around. Because generally Bitcoin is also quite strong in April, that lines up favorably. Coinbase got hammered on April 2 along with the rest of the market but recovered well. I don't remember how I got the notion earnings were moved to the end of April because they were May 8, and they propelled the stock. Coinbase and Bitcoin both ended up at ~21% with CONY lagging at a very respectable 9%. Data by YCharts Meanwhile, we're moving into June when Bitcoin seasonality is unfavorable. This is relevant because Coinbase price is quite correlated with the most important digital asset. Bitcoin Seasonality (Author's Own) Last time I argued Coinbase volatility was very low, making selling calls less attractive. It is now even lower. In the past 6 or 12-month periods the IV has only been lower 9% of the time. A silver lining; out of the money Coinbase calls are now somewhat more expensive than similar puts. Last time this wasn't the case while it is common for Coinbase and Bitcoin calls to trade like that. I'm currently still bullish on Bitcoin as I laid out in Potential Interesting Way To Gain Bitcoin Exposure. Key reasons: 1) Bitcoin ETF inflows are very strong this year. Below; assets under management for the two largest players. The iShares Bitcoin Trust ETF ( IBIT ) and Fidelity Wise Origin Bitcoin Fund ( FBTC ): Data by YCharts 2) Institutional adoption continues with RIA's increasingly allocating client portfolios to crypto. 3) Potentially Bitcoin is in a high profit/low volatility phase (coined by Fidelity). Somewhat confirmed by the low implied vol on both CONY as well as IBIT. 4) Bitcoin supply on exchanges going down, indicating a preference for long-term hodling over trading. 5) Expect Strategy ( MSTR ) to aggressively accumulate Bitcoin as long as its share price remains buoyant. On May 26, the firm reported having issued shares to buy another 4k Bitcoins. Seeking Alpha data shows its momentum as A+ and as long as it continues to run, I expect it to keep buying. Either financed by equity issuance or (convertible) debt. 6) Global money supply increased during April: Global money supply (MicroMacro) My enthusiasm is somewhat decreased because June is generally quite bad. I'm temporarily lowering my buy rating to hold. Right now, I rate these related assets as follows (with the caveat I can easily revert Bitcoin back to a buy in June): Asset Rating Coinbase Hold Bitcoin Hold CONY Sell I'm not a huge fan of most of the crypto-related equities. I think it is more important to avoid Strategy than Coinbase. From my latest note on MSTY : ...it owns around 500k Bitcoins. These are worth roughly speaking $40 billion. Meanwhile, the company's enterprise value is around $78 billion... But until the next Coinbase earnings call (Seeking Alpha data has it on 8/7/2025) the stock likely correlates highly to Bitcoin. I'd rather just be long Bitcoin without the execution risk at the company level. However, I don't expect it to perform badly while Bitcoin is doing well. It is really the valuation (D by Seeking Alpha) and the fact I don't really believe in the long term competitive advantage that usually keeps me from rating Coinbase equal to Bitcoin. This time I'll keep COIN at hold because I prefer it over CONY and don't want to lower the latter towards a strong sell. The main reasons I rate CONY lower are the systematic covered-call strategy while AUM is increasing rapidly, the low IV on Coinbase stock and the seasonal headwinds.
