Summary YieldMax COIN Option Income Strategy ETF (CONY) remains a hold due to high risk, persistent share price erosion, and unsustainable distributions. CONY’s strategy leverages synthetic options on Coinbase (COIN), generating high yields but capping upside and amplifying volatility exposure tied to Bitcoin. Total return since inception is positive for early entrants, but recent investors face a 34.5% total loss over twelve months despite a 126.4% yield. Distributions are primarily return of capital, offering tax efficiency, but principal erosion and declining payouts post-reverse split limit long-term appeal. Overview I've covered a ton of different YieldMax funds in the past, but YieldMax COIN Option Income Strategy ETF ( CONY ) is unique to me because it's the first high-yield income ETF I initiated a position in more than a year ago. When I previously covered CONY, I issued a hold rating due to the mixed performance and uncertainty around the volatility of Coinbase ( COIN ) at the time. Since my last coverage, CONY has implemented a 1:10 reverse split to reset the price deterioration that occurred. Therefore, I wanted to revisit the ETF to reassess its performance, income potential, and risk post-split. The appeal of the fund can ultimately depend on an investor's specific risk tolerance and circumstance. Looking at the performance over the last twelve months, we can see that CONY's share price has eroded by more than 74.7%. Despite its high distributions, the total return still sits at a loss of 34.5% over the same time frame. CONY now offers investors a massive estimated annual distribution rate of 126.4%. Since the time of my last coverage, the payout frequency has shifted to a weekly cadence. While this may increase the appeal for income investors, investors that were holding pre-split are likely to see much lower levels of income over time. Data by YCharts While I still maintain a hold rating on CONY, there is a caveat to this rating. I believe that the appeal of maintaining a position is entirely dependent on how long an investor has been holding shares. Despite the massive deterioration of the share price, I am still in a positive return territory and now achieved house money status. However, this is a lot easier to achieve when market indices and Bitcoin ( BTC-USD ) are trending upward. So let's start by taking a look at the underlying strategy that CONY implements to generate its earnings. Fund Strategy According to the latest fund overview , CONY now has total net assets of $847.5M. This is a large pullback from the fund's peak total assets under management of $1.5B only a few months ago. This can be a reflection of the fund's poor performance and investor's funneling money elsewhere. However, CONY is unique because it aims to mimic the underlying share price of Coinbase. However, Coinbase continues to parallel the daily price change in Bitcoin. At the time of my last coverage, Bitcoin was trading near its all-time highs above $120K. Since then, the price has pulled back to around $90K, so Coinbase followed the same momentum during the decline. Data by YCharts Therefore, CONY can present a lot more volatility than some YieldMax peers that track companies without any crypto exposure. Additionally, the fund implements a synthetic option writing strategy to get exposure to COIN, while harnessing its volatility to collect large option premiums to fuel distributions. However, the term synthetic refers to the fact that CONY doesn't actually own any of the underlying common shares of COIN. Therefore, the fund is writing options against an asset that it doesn't actually own, which increases the overall risk profile in terms of price stability through volatile markets. As we can see in the holdings below, CONY is primarily made up of U.S Treasury bills. Additionally, we can see below that there are several active call options at this time with varying expiration dates and strike prices. COIN US - 01/16/2026 C$280 COIN US - 12/19/2025 C$260 COIN CCL OPT 12/25 290 YieldMax If you aren't familiar with the process, the inclusion of an option writing strategy means that CONY will only be able to partially participate in the upside movement of COIN. This is because the upside growth is capped to whatever the selected strike price is. For instance, CONY has an active option with a strike price of $280 per share. If COIN sees its price run up to $300 per share before the expiration date, CONY would only be able to capture the price growth up to the $280 strike price, which essentially means that the remaining upside is sacrificed for the income generation that can be collected now. So if you are bullish on Coinbase, it's much better to simply hold the underlying. Performance Insight & Risks Despite the consistent share price deterioration, CONY has still managed to provide an attractive total return since its inception. As we can see below, the fund's share price has declined by over 76.4%. These massive losses have been offset by the distributions, which brings the total return up to slightly over 92% over the same time frame. However, the total return can significantly shift based on when you initiated your position so timing is very important with these ETFs. Data by YCharts For instance, I've held a position close to the fund's inception and I've now reached house money status. I consider this to be the point where you've collected more than your initial investment amount in distributions. So if you invest $10,000, house money status is when you've collected $10,000 in distributions and collected back your initial investment, which significantly reduces your risk at that point going forward. After closely measuring how these YieldMax funds operate, I believe that its performance and outlook can be summarized in three different scenarios, as follows: Coinbase Price Rises = CONY likely to see minimal upside and distributions will remain consistent. However, distributions may be large, which may cause the share price to remain flat, rather than show any growth. Coinbase Price Trades Choppy/Flat = CONY's share price may slowly trend downward, but distributions may be high due to volatility. This can lead to CONY outperforming COIN during a period of choppiness and may present the most favorable conditions for CONY. Coinbase Price Declines = CONY will suffer from share price erosion and payouts may trend downward, depending on how severe of a downside movement takes place. CONY will struggle to recover from this downside and underperformance is likely to deepen. After holding over a dozen of these YieldMax funds, I now consider some of them to be self-liquidating funds, but this is somewhat by design. This simply means that the large yields are unsustainable so NAV erosion and share price deterioration is ultimately inevitable. So once again, this is why timing on the entry is very important. This sort of vulnerability also means that investors are likely required to commit to a long term position so that the distributions can eventually offset the share price erosion. I recommend that investors meticulously track their performance in a spreadsheet by measuring the share price decline versus all distributions received, in order to get a clearer picture of the fund's actual performance and total return. Additionally, CONY is very likely to continue underperforming Coinbase over the long-term, so if you are bullish on the underlying it makes more sense to just hold COIN. Data by YCharts As we can see below, Coinbase's price closely mirrors the shifts in Bitcoin. Although Bitcoin has pulled back from its all-time highs, it wouldn't be unusual to see another large decline at some point. However, it may make sense to add some shares of CONY here now that Bitcoin has pulled back from its highs and seems to be hovering around $90K now. Data by YCharts Lower Payouts Post-Split As of the latest declared weekly distribution of $1.1311 per share, the current dividend yield sits around 126.4%. While the split doesn't actually change anything from a yield perspective, shareholders that have been maintaining a position since before the split are likely to see their income slowly decline over time. Even though the reverse split appeared to reset the price, it doesn't restore that value that you've already lost. Since your underlying principal is smaller, the dollars you receive now will be lower than when you first started your position. Therefore, CONY can be a tricky fund because if you want to keep all distribution amounts within a tight range, it may require active reinvesting of those distributions to accumulate more shares. Additionally, the fund's payouts continue to trend downward as the underlying NAV declines and the share price erodes. Unfortunately, I think we have already passed the golden era for entry, which was when Bitcoin was rapidly increasing and breaking new highs every week. As bitcoin rose, so did the share price of COIN. Now that the cycle seems to have shifted, the appeal is limited. Seeking Alpha When looking at the breakdown of the distributions, CONY seems to prioritize return of capital payouts. As we can see below, the latest payout was made up of 96.76% return of capital distributions, which are more tax-efficient. This is because return of capital distributions aren't classified as income and therefore, aren't taxed as such. Instead, return of capital distributions reduce an investor's cost basis and allows taxes to be deferred until the time of sale. So on a more positive note, although the share price has consistently eroded, investors have the potential to collect income with a limited tax consequence. YieldMax However, it's also important to note that some of these tax-efficient distributions don't necessarily equate to all the income being tax-free. The makeup of payouts can shift every week and a portion of the distribution can be fueled by net investment income. Distributions supported by net investment income are typically classified as ordinary dividends, which have the greatest tax burden for investors. Takeaway In conclusion, I maintain a hold rating on CONY at this time. However, the caveat is that holding shares through the possibility of further declines can be easily digested by investors that have already achieved house money status. While I am not pleased with the share price erosion of the fund, this has taken place by the design. The large distributions are simply unsustainable and requires investors to time their entry or maintain a long term position so that distributions can eventually outpace the declines. Therefore, this is a high risk/high reward fund that remains vulnerable to a larger pullback in the price of Bitcoin. On a positive note, at least the distributions seem to primarily be made up of return of capital, which are more tax-efficient for long-term investors.
