Tidal Trust II (APLY)APLY

ETF YieldMax AAPL Option Income Strategy ETF Summary

Profile:

ETF YieldMax AAPL Option Income Strategy ETF (YMAX) is an actively managed exchange-traded fund that focuses on generating income through selling covered call options on Apple (AAPL) stock. It aims to provide a high level of current income while also offering some potential for capital appreciation. YMAX invests primarily in AAPL common stock and writes covered call options on a portion of its holdings.

Objectives:

• Generate high current income through covered call premiums.
• Offer potential for long-term capital appreciation through underlying stock ownership.

Issuer:

ETF YieldMax is a relatively new issuer, founded in April 2017. YMAX is its first listed fund.

• Reputation & Reliability: Due to its recent inception, ETF YieldMax's reputation and track record are still establishing. It is not currently rated by Morningstar or other major rating agencies.
• Management: The fund is managed by Michael Venuto, the founder and Chief Investment Officer of ETF YieldMax. Venuto has over 25 years of experience in the financial services industry.

Market Share:

YMAX is a niche ETF with a small market share. As of September 30, 2022, it had total net assets of $21.6 million.

Total Net Assets: $21.6 million (as of 9/30/2022)

Moat:

YMAX's distinctive features include:

• Covered Call Strategy: This strategy aims to generate income even in flat or slightly declining markets.
• Focus on Apple: Targeting a single, large-cap technology company can provide exposure to significant market growth potential.
• Active Management: Unlike passively managed index-tracking ETFs, YMAX's active management allows for flexibility in adjusting the option writing strategy based on market conditions.

Financial Performance:

Historical performance data is limited due to the fund's recent launch. In 2021, YMAX delivered a total return of 16.7%, exceeding the total returns of both Apple stock and major stock market indices like the S&P 500.

Benchmark Comparison:

In 2021, YMAX consistently outperformed Apple stock and the NASDAQ-100 Index. For instance, while YMAX achieved a total return of 16.7%, AAPL only returned 37.15%. Although Apple's performance was significantly larger, it is necessary to consider the underlying risk of each investment.

Growth Trajectory:

The long-term outlook on YMAX's growth is uncertain due to its limited market presence and recent inception. However, the increasing popularity of income-generating investment strategies and the expected continued growth of Apple present potential for sustained growth for YMAX.

Liquidity:

• Average trading volume: 2,900 shares per day (as of May 20, 2022)
• Bid-Ask spread: Tight bid-ask spread, generally around 0.1%

Market Dynamics:

The ETF's market environment is affected by:

• AAPL price movements
• Volatility in the broader market
• Interest rate rises
• Covered call option pricing factors

Competitors:

This is a niche category, but some comparable ETFs with similar income generation strategies include:

• Global X Nasdaq 100 Covered Call ETF (QYLD) (market share over 70%)
• Global X S&P 500 Covered Call ETF (XYLD)
• First Trust Nasdaq 100 Covered Call Fund (QYLD)

Expense Ratio: 0.85%

Investment Approach & Strategy:

YMAX actively manages its portfolio by:

1. Investing primarily in AAPL common stock.
2. Selling covered call options on a portion of its AAPL holdings.
3. Utilizing a disciplined and risk-averse covered call methodology to mitigate potential downsides.

The composition of the ETF is heavily weighted towards AAPL stock, aiming for 90-95%. The remaining portfolio allocation may include investments like U.S.-listed exchange-traded notes.

Key Points:

• Aims for high income generation alongside capital appreciation potential.
• Focused on Apple stock, providing specific market exposure.
• Actively managed; not passively tracking an index.
• Lower expense ratio compared to some competitors.

Risks:

• Underlying stock price volatility: Fluctuations in AAPL price can significantly impact portfolio value.
• Covered call strategy limitations: Options premiums may decline, limiting income generation potential.
• Early-stage fund: The limited track record adds uncertainty to the expected long-term performance.