Price Returns are Helpful

Novice investors can be “deceived” when looking at YTD investment returns. For example, when I look at my positions in ETF ULTY, it would appear that I made a terrible mistake in buying this alternative ETF. Not only is the expense ratio (1.30%) very high, but the price returns have been poor. This image shows the 300 shares in my traditional IRA with a loss of about 24% and 200 shares in my ROTH with a loss of about 25.6%. On the surface this looks like a loser.

While this isn’t desirable, some of what my investment portfolio contains looks like it has underperformed the broad market. This is not, however, reality. The information on the Fidelity Positions page, or in my statement overlook another important element. The missing element is the returns from dividends. Of course, because I trade options, that ROI is also missing.

The Dividends from ULTY

ULTY pays a weekly dividend. The following image from Fidelity’s Activity page shows the transactions related to this investment from March 12 to the present. As you can see dividends have been paid weekly. At the top you can also see that I added some shares of ULTY to both my IRA and my ROTH.

ULTY Total Returns for One Year

Using Seeking Alpha, it is easy to modify the chart to show more than price returns. The following image shows that reality. (ULTY does not have 5-year, or 10-year returns as it is a new fund.) Although ULTY’s 1-year returns are not as good as the overall market, a 22.8% return is actually quite good. Note that there are good times to buy shares and that there are times when ULTY outperformed the S&P 500 index. As a reference point, the fund’s inception was 02/28/2024. So it is a little over one year old.

ULTY’s Top Ten Holdings

ULTY is not the same as the other derivative income ETFs offered by YieldMax. Many of those focus on a single stock. Those are higher risk. ULTY has 101 holdings, and the top ten are shown here. The primary risk is in the top ten, as they are over 50% of the total holdings.

The Alpha Analyst Opinion

There are many naysayers when it comes to ULTY. It pays to read what they say. However, I think this author has a balanced perspective.   

The Dividend is Weekly and the Current Yield is over 100%

Here comes the risk. The yield is only as good as the skill of the investors doing the options trading on the 101 positions in the ULTY ETF. However, I think it is worth the risk. In addition, my total investment in ULTY is less than $25K. I could buy CD’s worth $25,000, but I like weekly income and I like the higher yield.

Buy and Dividend History

This is a relatively new investment in my portfolio. I started slowly accumulating shares in July 2025. I added more this week.

I wrote about these derivative ETFs before and acknowledged that they are a higher risk investment. However, since I started buying ULTY I have received $3,314.60 in dividend income in my traditional IRA. I received (thus far) $2,740.68 in my ROTH.

There are two other things worth mentioning. One, ULTY did a reverse split, so the number of shares I started with was reduced to a total of 500 at this time. Reverse splits can be unnerving and are frequently not a good sign.

In addition, I did a ROTH conversion from my traditional IRA to the ROTH of 300 ULTY shares.  This was done in August when the price of the shares was much higher. However, the dividends I am earning in my ROTH are tax free. If I did not still have to finish my 2026 RMD, I would move more of the ULTY shares from my traditional IRA to the ROTH.

New Derivative Income ETFs Aren’t Worth the Risks

There are risks with Derivative Income ETFs. Here is what Barron’s said in a recent article: “With these ETFs, that collected premium is paid out as income. A tactical short-term investor might be able to buy a YieldMax ETF, receive a high payout, then sell the ETF even if the stock’s return ends up being flat. The option’s implied volatility is too high, given how the underlying stock ultimately behaves.” Barron’s

It is important to note that they were talking about single stock derivative ETFs. “Categorized as derivative income funds by Morningstar, these funds use options to generate income from an individual stock or a diversified, often indexed, portfolio.” Barron’s

I own some of those ETFs too, but ULTY is not the same type of animal.

The Final Analysis

So far I don’t really have a loss on this investment. The following spreadsheet shows that my true returns are about $897 in less than a month with a gain of 4.3%. This isn’t wonderful, but it is much like owning a CD at this point. I think I will more than recoup my investment.

ULTY Fund Profile

Tidal Trust II – YieldMax Ultra Option Income Strategy ETF is an exchange traded fund launched and managed by Tidal Investments LLC. The fund invests in public equity and fixed income markets of the United States. For its equity portion, it invests through derivatives in stocks of companies operating across diversified sectors. The fund uses derivatives such as options to create its portfolio. It invests in growth and value stocks of companies across diversified market capitalization. For its fixed income portion, the fund invests in short-term U.S. treasury securities. The fund employs quantitative analysis to create its portfolio. Tidal Trust II – YieldMax Ultra Option Income Strategy ETF was formed on February 28, 2024 and is domiciled in the United States.

The Fund seeks to have current income and its second objective is to seek exposure to the share price of select US listed securities, subject to a limit on potential investment gains. The Fund uses both traditional and synthetic covered call strategies that are designed to produce higher income levels. Benchmark: Index is not provided by Management Company

Higher Risk Buys with an Options Twist

This was from a previous post: “As my readers know, I am an options trader. I trade covered-call options and cash-covered PUT options. There are ETFs that will do that for you. However, you give up the driver’s seat when you turn this over to a fund manager. Therefore, although I did purchase three options-oriented ETFs, they will be a very small slice of our total investment portfolio. The three that I purchased are AMDY, NVDY, and ULTY. Of the three, AMDY offers the best “safety” in my opinion.”

I went on to say, “You should notice three things about these specialized ETFs. 1) All three have high expense ratios. That is due to the fact that the fund manager wants to be paid for trading options for you. 2) All three have crazy high dividend yields (there is risk!), and 3) they are not diversified. Only ULTY is diversified, but its holdings are high-risk investments.”

Recommendation: Options For Investing Doers

Don’t buy  investments you don’t understand. Also, be careful to understand the huge differences that price returns and total returns have on your success. A bird in the hand is often worth two in the bush.

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