ULTY: High-Income Innovation or Risky Play? A Deep Dive into Performance and Potential

By Eugene McCombs - 5/26/25

Introduction

In an investing environment where income generation is increasingly in demand, the YieldMax Ultra Option Income Strategy ETF (ULTY) has emerged as a unique player. Launched on February 28, 2024, ULTY aims to deliver outsized monthly income through an actively managed strategy focused on covered call writing across a broad range of U.S.-listed securities. With a sky-high distribution yield and aggressive options strategy, it has quickly gained the attention of income-seeking investors. But how has it actually performed, and is it worth the risk?

Performance Since Inception

Since its debut, ULTY has captured headlines with its annualized distribution yield of approximately 83.73% as of May 23, 2025. This yield, achieved through collecting option premiums via covered call strategies, makes ULTY one of the highest-yielding ETFs on the market.

However, yield alone doesn't tell the full story. The fund’s year-to-date (YTD) return is 1.59%, falling short of its category average of 4.85%, according to Yahoo Finance. This reveals a key trade-off: while ULTY is exceptional in generating income, its potential for capital growth has been more modest.

Additionally, market data as of late May 2025 shows ULTY trading at $6.10, with an intraday low of $5.98 and high of $6.20, suggesting relatively tight price movement in the short term.

The Pros of Investing in ULTY

• High Income Potential: ULTY's standout feature is its extremely high yield. Investors seeking monthly cash flow—such as retirees or income-focused portfolios—may find ULTY's distributions highly attractive.

• Diversified Covered Call Strategy: Unlike single-stock covered call ETFs, ULTY spreads its exposure across multiple underlying assets, which can potentially reduce the volatility that comes from relying on one name (like Tesla or Nvidia alone).

• Monthly Distributions: The fund pays investors monthly, providing a consistent stream of income, which can be reinvested or used for regular expenses.

The Cons of Investing in ULTY

• High Expense RatioAt 1.30%: ULTY's expense ratio is steep compared to passive index ETFs, potentially eating into total returns over time.

• Capped Upside Potential: By selling covered calls, ULTY sacrifices gains above the strike price of its options. In strong bull markets, this strategy underperforms because it limits capital appreciation.

• Market and Strategy Risk: Though diversified, ULTY remains vulnerable to market declines. Moreover, the effectiveness of its strategy depends on market volatility and premium pricing, which can fluctuate unpredictably.

• Complexity: The use of derivatives may not be ideal for all investors, particularly those unfamiliar with the mechanics of options trading. ULTY’s income strategy comes with a level of complexity that can mask underlying risk.

Final Verdict: Is ULTY Worth It?

YieldMax ULTY ETF is a bold offering in the world of income-focused investing. With a distribution yield that rivals nearly any fund on the market, it could serve as a powerful income generator for the right investor. However, the trade-offs—limited growth, high fees, and strategy risk—must be carefully considered.

Investors looking for reliable cash flow and who understand the nuances of options-based strategies may find ULTY a valuable addition to their portfolio. Those seeking long-term capital appreciation or simplicity in their investment vehicles may want to look elsewhere.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult with a financial advisor before making investment decisions.