TSYY: Leveraged Income Fund from Tesla

GraniteShares YieldBOOST TSLA ETF (TSYY) is a high-risk leveraged income fund that provides massive levels of income by investing in Tesla options. The ETF is designed to offer a high level of income, but investors should be aware of the high risks involved. The fund's performance is closely tied to the performance of Tesla's stock, which can be volatile. Investors should carefully consider their risk tolerance before investing in this ETF.

The GraniteShares YieldBOOST TSLA ETF (TSYY) is a high-risk leveraged income fund that provides substantial levels of income by investing in Tesla options. Launched in December 2024, the ETF aims to offer a high level of income to investors through its option writing strategy. However, investors should be aware of the significant risks involved.

TSYY focuses on generating income by writing put options on a leveraged Tesla ETF. The fund uses a synthetic option strategy, meaning it does not hold any common shares of Tesla but writes options against a leveraged ETF. This approach amplifies the fund's volatility and risk profile. The fund's management fee is 0.99%, and it pays out distributions on a weekly basis, which can be appealing for investors seeking frequent income.

Since its inception, TSYY has experienced a continuous decline in its share price, losing approximately 63.7% of its value. Despite this, the fund has been able to provide a higher total return than common shares of Tesla, including distributions, resulting in a loss of 26.3%. However, common shares of Tesla have declined by nearly 30% over the same period. This highlights the fund's ability to generate income but also underscores the significant risks involved.

TSYY's high annual distribution rate of approximately 140% is unsustainable and contributes to the fund's decline. The fund's operating history does not indicate that TSYY has been able to achieve lower downside risk. The leveraged nature of the fund strategy presents a greater amount of risk compared to alternative funds like YieldMax's TSLY, which has a smaller estimated annual distribution rate of approximately 65.9% but has maintained a lower total loss on a YTD basis of 24.7%.

Investors should carefully consider their risk tolerance before investing in TSYY. The fund's inclusion of an option strategy caps the upside price potential, while still exposing shareholders to all of the downside risk. This means that TSYY cannot recover from market downturns as efficiently as other investments.

In conclusion, GraniteShares YieldBOOST TSLA ETF (TSYY) offers high levels of income but comes with significant risks. Investors should thoroughly understand the fund's strategy and carefully consider their risk tolerance before investing. The fund's performance is closely tied to the performance of Tesla's stock, which can be volatile.

References:
[1] https://www.etf.com/sections/features/leveraged-etf-launches-leap-investors-embrace-risk
[2] https://seekingalpha.com/article/4808035-tsyy-high-risk-leveraged-income-from-tesla