Key Points
The YieldMax AMZN Option Income Strategy ETF (AMZY) will tempt Amazon stock bulls with its gigantic yield.
However, high-yield dreams may lead to disappointment as the AMZY ETF could underperform Amazon stock.
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For income-focused investors, big yield is a big deal. Consequently, the yield that the YieldMax AMZN Option Income Strategy ETF (NYSEARCA:AMZY) advertises will undoubtedly catch the attention of eager wealth builders.
High yield is the focus of YieldMax’s exchange traded funds (ETFs), and the AMZN Option Income Strategy ETF definitely falls into the high-yield category. Indeed, the AMZY ETF takes big yield to an extreme degree.
Don’t just rush into a hasty position with this fund, though. Conduct your full due diligence because, as we’re about to discover, AMZY’s massive yield won’t necessarily give investors the returns they hoped for.
What’s in the AMZY ETF, and What’s Not
First of all, the YieldMax AMZN Option Income Strategy ETF is brought to you by the disruptive fund firm YieldMax. It is intended to provide “indirect exposure to the share price returns of” Amazon (NASDAQ:AMZN) stock.
The key word here is “indirect.” Notably, the YieldMax AMZN Option Income Strategy ETF does not hold any shares of Amazon stock. Instead, the AMZY ETF “uses either a synthetic covered call strategy or a synthetic covered call spread strategy” to follow (more or less) the price moves of Amazon stock.
In other words, the fund uses options to loosely imitate the price action of AMZN stock. There’s more to it than that, but we’ll uncover the dirty details in a moment.
Next, I’d like to point out another surprising component of the YieldMax AMZN Option Income Strategy ETF. Check the fund’s holdings, and you’ll find that AMZY includes U.S. Treasury bonds.
I’ll bet you didn’t expect the YieldMax AMZN Option Income Strategy ETF to include stock-mimicking call options and government bonds, but not any Amazon stock shares. The result is that AMZY’s results can vary widely from the performance of AMZN stock. So, even if you’re bullish on Amazon stock, you may still have second thoughts about YieldMax’s fund.
AMZY’s Jaw-Dropping Yield
If you’re familiar with covered call option strategies, you might know that these strategies can basically squeeze extra income from a stock. Amazon stock doesn’t pay a dividend, but covered call options can basically juice some dividend-like income from a stock.
By deploying synthetic option strategies involving call options, the YieldMax AMZN Option Income Strategy ETF can generate income from Amazon stock (especially when the AMZN share price goes up) without actually holding any Amazon shares. At the same time, the fund can squeeze out even more income by holding government bonds.
That’s how the YieldMax AMZN Option Income Strategy ETF can advertise a “distribution rate” (i.e., an estimated forward annual dividend yield) of 64.06%. If everything goes according to plan and Amazon stock heads higher during the next 12 months, YieldMax’s fund should be able to generate substantial income from AMZY’s options and Treasury bonds.
Not only that, but yield hounds will like the fact that the YieldMax AMZN Option Income Strategy ETF pays cash distributions every month. The most recent distribution was $0.7963 per share, paid out on May 9.
I’ll admit that the income from the fund’s government bonds should be quite reliable. Yet, as we’ll discuss now, not everything associated with the AMZY ETF is as reliable as Treasury bonds.
Here’s the Catch
Now, you have every right to ask the crucial question: What’s the “catch” with the YieldMax AMZN Option Income Strategy ETF? Surely, the fund’s 64.06% yield can’t just be risk-free money for everyone.
It’s not risk-free money, first and foremost, because the YieldMax AMZN Option Income Strategy ETF can lose value if Amazon stock goes down. Although AMZN stock often goes up in price, it can also go down sometimes, like it did in 2022 and in the first quarter of 2025.
Moreover, covered call sellers will probably understand that this strategy puts a limit or “cap” on an investor’s upside potential. This means that even if AMZN stock goes to the moon, the YieldMax AMZN Option Income Strategy ETF will only go up by a limited amount.
In the fund’s prospectus, YieldMax actually provides an example of what could potentially happen. Over a period of seven months, Amazon stock could have some up months and some down months but still gain 35% overall. Yet, the YieldMax AMZN Option Income Strategy ETF could be negatively impacted by the down months and, due to the option strategy’s built-in gain limits, AMZY might end up underperforming or even losing value.
The result can be unexpected and disappointing results. Simply buying and holding Amazon stock may end up being the better choice if the stock has down periods but generally trends higher.
Meanwhile, the fluctuations of Amazon stock could cause problems for the YieldMax AMZN Option Income Strategy ETF. Over the next 12 months, the advertised 64.06% yield could change and even if the yield holds steady, this wouldn’t guarantee 64.06% net gains or even a positive return.
Hence, the huge potential rewards of the YieldMax AMZN Option Income Strategy ETF come with substantial risk. If you choose to buy this YieldMax fund, please limit your purchase to a small number of shares. And for a less perilous investment path, consider simply buying and holding shares of Amazon stock.
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