CONY: This Fund Is Better Positioned Now In The Current Market Environment

Summary I am upgrading CONY to a hold, as the market and regulatory environment for crypto is now more favorable under the Trump administration. CONY’s options strategy caps upside but exposes significant downside, making it riskier, especially given Coinbase’s high volatility. Despite underperforming Coinbase itself, CONY has delivered impressive income and total returns since inception, aligning with its income-focused objective. With calmer markets, pro-crypto policy, and potential regulatory easing, CONY is better positioned to generate consistent income for risk-tolerant investors. Finding the right balance between risk and reward is critical when investing. While many people have similar long-term objectives, certain individuals will have a higher risk-tolerance for the kinds of investments and losses these people are willing to accept. Dividend investing has become increasingly common since 2008. With rates at historically low levels for much of the last 2 decades, individuals seeking income have been more willing to focus on equities, and a number of new investments focus on offering a balance of substantive and consistent payouts have come out. Some of the higher-risk income-focused investments are the YieldMax funds. While some of these covered-call exchanged-traded funds use a buy-write strategy with more traditional equities, many of these ETFs focus on more volatile companies to generate additional income by taking advantage of elevated implied volatility premiums. One of the highest risk YieldMax investments is the YieldMax COIN Option Income Strategy ETF ( CONY ) . This exchange-traded fund’s inception date was in August of 2023. Data by YCharts The YieldMax COIN Option Income Strategy ETF has offered investors total returns of 117.4 percent since August of 2023, while the S&P 500 has offered investors total returns of 37.77 percent during this same time period. Still, CONY has notably underperformed Coinbase ( COIN ), the underlying equity this fund is long through the use of synthetic call spreads. Data by YCharts Coinbase has outperformed CONY by nearly 110 percent since the fund’s inception in August of 2023, even though this YieldMax ETF has still delivered both substantive income and impressive overall returns during this same timeframe. I last wrote about the YieldMax COIN Option Income Strategy ETF in March of 2025, and I rated this fund a sell primarily because of some flaws in the construction of this investment. Today, I am upgrading this investment to a hold. The financial and market environment for CONY is much more favorable today because of Trump’s efforts to standardize digital currencies, including most notably bitcoin. The President has installed both a Treasury Secretary and SEC Chairman who have favorable views about cryptocurrencies, and Fed Chair Powell will also likely be replaced next year with someone open to further easing regulations of digital currencies as well. Markets have also calmed down recently with Trump taking a more cautious tone and approach to negotiating trade agreements after implementing broad-based tariffs earlier this year. CONY’s risk profile is more favorable now. The YieldMax COIN Option Income Strategy ETF has an expense ratio of 1.22 percent, a 30-day SEC yield of 3.53 percent, and $1.19 billion in assets under management. CONT’s trailing yield is 174.89 percent A List of CONY’s Top Holdings (Seeking Alpha) The options strategy that this YieldMax fund uses is to usually buy at-the-money call options and then sell call option contracts that are 0-15 percent out-of-the money. CONY also shorts put options, so the fund caps upside gains while leaving most of the downside risk exposed. This ETF owns call options that expire in 1 to 6 months and sells contracts that expire in one month or less to attempt to generate consistent income. The payouts of this ETF are taxed at ordinary income rates. The ETF seeks to take an 80 percent net long position in the underlying Coinbase Global equity, and a net 20 percent short approach as well. A List of CONY’s Options Strategies (CONY prospectus) Coinbase is one of the more volatile companies in the market with a standard deviation of 46.22. This cryptocurrency exchange is significantly correlated with the underlying price of bitcoin which is also prone to large moves in short period of time. Chart of Coinbase compared to Bitcoin (Portfolioslab) YieldMax’s approach of not protecting most of the ETF’s downside risks while capping upside potential is dangerous when markets become less predictable as was seen earlier this year. Still, today, the market environment should remain more favorable for CONY. Trump has softened his tone and approach to trade negotiations with the EU as well as with other countries. Equities have remained much calmer of recent. The Republican’s clear intent to make the 2017 Trump corporate tax cuts permanent should also bolster the market, and the President has made emphasizing the importance of cryptocurrencies thriving in the US a top priority as well. Trump’s son Eric is also a top executive at American Bitcoin. The President reiterated in March that he wants the US to become the crypto capital of the world. While digital currencies have always been more volatile for a number of reasons, ranging from lower levels of liquidity to actions taken by some governments against this still largely unregulated market, the overall environment for cryptocurrencies is much more favorable now. The likely appointment of a Federal Reserve Chair who is committed to further integrating digital currencies within the US financial system should be a key catalyst for the crypto markets next year as well. While falling volatility levels both in the markets overall and in Coinbase will likely lower the monthly payouts Cony makes by selling options against the calls the fund owns, as has been seen the last several months, this ETF should continue to pay out consistent and significant income as well. A Table of CONY’s Payouts ( stockanalysis.com ) CONY has still paid out nearly $.60 a month of income since February despite lower implied volatility premiums in the options this investment sells. Coinbase is too volatile of a company for CONY to track all or most of the underlying equity’s upward moves, and this investment higher-risk options strategy does leave significant downside risks exposed. Still, the primary goal of this YieldMax fund is to generate additional income, not maximize total returns, and this investment should be well positioned to accomplish that goal in the current more favorable market and financial environment.

Source: Seeking Alpha