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MSTU vs MSTX vs MSTY

MSTU, MSTX, and MSTY are all ETFs (Exchange-Traded Funds) that provide exposure to MicroStrategy Inc. (MSTR), a company known for its significant Bitcoin holdings. Here’s a breakdown of the differences between these ETFs:

• MSTU:
  • 2x Leveraged Long ETF: MSTU aims to provide 2x the daily performance of MicroStrategy’s stock (MSTR). If MSTR increases by 1% in a day, MSTU should theoretically increase by 2%. Conversely, if MSTR drops by 1%, MSTU would drop by 2%.
  • High Volatility: MSTU is highly volatile, with an implied volatility of 180% and an ATR (Average True Range) that reflects its extreme price movements.
  • Expense Ratio: MSTU has an expense ratio of 1.05%.
  • Risk and Reward: MSTU is suitable for investors who are bullish on MicroStrategy and Bitcoin, as it offers the potential for higher returns but also higher risks. It is not recommended for long-term holding due to the compounding effect of daily rebalancing, which can erode gains over time.
  • Performance: MSTU has performed well during bull markets but can also experience significant drawdowns during market corrections.
• MSTX:
  • 1.75x Leveraged Long ETF: MSTX aims to provide 1.75x the daily performance of MicroStrategy’s stock (MSTR). If MSTR increases by 1% in a day, MSTX should theoretically increase by 1.75%. Conversely, if MSTR drops by 1%, MSTX would drop by 1.75%.
  • Expense Ratio: MSTX has an expense ratio of 1.29%.
  • Risk and Reward: Similar to MSTU, MSTX is suitable for investors who are bullish on MicroStrategy and Bitcoin. However, the lower leverage (1.75x) compared to MSTU (2x) means it is less volatile and potentially less risky.
  • Performance: MSTX has also performed well during bull markets, but it is less volatile than MSTU, which can make it a more stable choice for investors who want leverage but are wary of extreme price swings.
• MSTY:
  • Covered Call ETF: MSTY is a synthetic covered call ETF that aims to provide exposure to MicroStrategy’s stock while also generating a regular dividend return. It does not use leverage.
  • Dividend Income: Unlike MSTR, which does not pay dividends, MSTY provides a regular dividend return to investors by using a covered call strategy.
  • Lower Volatility: MSTY is less volatile compared to MSTU and MSTX because it does not use leverage. It is designed to provide a more stable return and income stream.
  • Risk and Reward: MSTY is suitable for income-focused investors who want exposure to MicroStrategy but prefer a more conservative approach. It is less likely to experience the extreme price movements seen in leveraged ETFs like MSTU and MSTX.
  • Performance: MSTY has performed well, but it is not designed to provide the same level of upside potential as leveraged ETFs. However, it offers a more balanced approach with a focus on income.

SummarySummary

• MSTU: Best for aggressive, short-term investors who are bullish on MicroStrategy and Bitcoin and can handle high volatility.
• MSTX: Suitable for investors who want leverage but are looking for a slightly less volatile option compared to MSTU.
• MSTY: Ideal for income-focused investors who want exposure to MicroStrategy with a more stable and conservative approach.

Each ETF has its own risk and reward profile, and the choice depends on your investment goals, risk tolerance, and time horizon.

It's a very good idea!
I just thinking about to generate a "passive" (or semi-passive) income. I DCA-ing into BTC with "child benefit" of my kids to create a solid base to which they rise. But I thought to diversificate a little bit, to not be 100% in Bitcoin...
The option you described seems like a very good alternative, thank you for it.