YieldMax’s 44% Yield on Microsoft Sounds Incredible. Look at the NAV.

By John Seetoo Published May 1, 7:37AM EDT

Quick Read

YieldMax MSFT Option Income Strategy ETF (MSFO) offers a 44.17% yield but has seen its NAV drop -21% year-to-date as the fund taps into principal to maintain dividend payments when option premiums fall short. Microsoft (MSFT) common stock returned 8.54% over one year while MSFO lost 21.15%, showing the covered-call strategy captured none of the stock’s upside.
YieldMax’s single-stock covered-call ETFs capitalize on Magnificent 7 volatility, but MSFO’s strategy of writing call spreads too conservatively on Microsoft shares generates insufficient premiums to sustain both its high dividend yield and NAV stability.

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YieldMax’s 44% Yield on Microsoft Sounds Incredible. Look at the NAV. — © bigjom jom / Shutterstock.com

YieldMax has pioneered a significant niche in the market with its single-stock covered call ETFs. Taking advantage of the ramped-up volatility that the Magnificent 7 tech stocks injected into the S&P 500, YieldMax capitalized on the timing with their covered-call platforms for each one of the Magnificent 7 stocks, and has done a lot of business with them.

One of the biggest attractions for the YieldMax single-stock ETF series is their inordinately high dividend yields. For example, the YieldMax MSFT Option Income Strategy ETF (NYSE: MSFO) boasts an eye-popping 44.17% yield at the time of this writing. However, it comes with an NAV beartrap with sharp teeth as its trade-off.

YieldMax MSFT Option Income Strategy ETF

YieldMax pioneered single-stock, covered-call income ETFs specifically for Magnificent 7 stocks, due to their volatility. MSFO is their Microsoft ETF.

MSFO is a YieldMax single-stock ETF that generates its dividends from covered-call spread writing against Microsoft, Inc. (NASDAQ: MSFT | MSFT Price Prediction) stock. The ETF’s active management opens and closes these call option positions weekly, and MSFO pays out accordingly. The strategy attempts to mitigate downside risk while drawing income from option premiums and still capture at least a portion of upside gains on the underlying Microsoft stock movement.

Net Assets	$88.98 million	NAV	$12.86
Yield	44.17%	Inception	8-24-2023
52-Week Range	$11.14-$18.75	YTD Return	-19.96%
Expense Ratio	1.03%	1-Year Return	-21.15%

Robbing Paul to Pay Paul

A man and a woman, both appearing to be in their 60s, are shown in a close-up, mid-discussion. The man on the left has grey hair and a beard, wearing a white shirt and light blue tie, with his left hand gesturing. The woman on the right has long blonde hair and wears a light grey collared shirt, looking forward with a serious expression. Behind them, a translucent green and blue overlay shows details of a U.S. dollar bill, including text like 'RESERVE NOTE' and an eye from a portrait, along with a key.

MSFO’s NAV depletion shares some mechanical similarities with Social Security’s looming insolvency, except whereas Congress is the entity taking from Social Security, MSFO is taking from itself,

Social Security’s looming insolvency perfectly illustrates the notion of “robbing Peter to pay Paul”. The insolvency is primarily created by repeated Congressional borrowing from the Social Security trust fund for its spending profligacy, essentially leaving behind worthless I.O.U.s. In the case of MSFO, it is an unfortunate case of “robbing Paul to pay Paul.”

MSFO is paying a gigantic dividend yield, but NAV has dropped precipitously, with double-digit losses from 2025 and continuing through 2026. Translation: MSFO has had to tap into NAV to continue paying out dividends when premiums fell short of target amounts. This means that in the aggregate, investors’ dividends has been a net return of their own invested funds – after the YieldMax management expenses.

To be fair, MSFT common stock has had difficulties this past year. Billions in CapEx for A.I. development has given many analysts pause to reconsider their earlier projections of MSFT earnings vs. revenues for 2026. The intrinsic upside volatility that MSFT would normally experience had become erratic.

Nevertheless, investors who held MSFT stock still made better upside gains than those who held MSFO. Apart from dividends, not only did MSFO not capture any of the reduced MSFT upside in the past year, but the NAV loss from tapping into the warchest to payout dividends put MSFO further down the hole. This would seem to indicate that the call spread strategy might need to be adjusted. Any premiums generated by the calls are insufficient. Perhaps the calls are too restrictively hedged to the point of capturing upside to preserve NAV. The result is that the premiums are a revolving door, the NAV gets little to none of its tracked stock upside, and loses value intrinsically any week that MSFO is short of its weekly target.

Ticker	Year to Date	1-Year Return	3-Year Return
MSFT	-12.03%	+8.54%	+41.42%
MSFO	-19.96%	-21.15%	N/A

In Conclusion:

The long term odds are in favor of MSFO and MSFT righting their ship’s course, but the short term odds are still risky for investors.

YieldMax managers aren’t incompetent. They will find the right formula to tweak the MSFO strategy to get things on firmer footing. Will dividends have to be reduced? Possibly. Will NAV upside tracking with MSFT be restored to at least a reasonable percentage ? Quite likely. Will MSFT resume its big double-digit annual gains that made it a $3 trillion company? Eventually.

However, until circumstances change, MSFO will continue to be attractive for its 44% yield, but full of land mines for those investors unaware of the NAV pitfall risks. It’s important to know the rules of the game before taking a seat at the casino table.

About the Author John Seetoo →

After 15 years on Wall Street with 7 of them as Director of Corporate and Municipal Bond Trading for a NYSE member firm, I started my own project and corporate finance consultancy. Much of the work involves writing business plans, presentations, white papers and marketing materials for companies seeking budgetary allocations for spinoffs and new initiatives or for raising capital for expansion or startup companies and entrepreneurs. On financial topics, I have been published under my own byline at The Motley Fool, a673b.bigscoots-temp.com, DealFlow Events’ Healthcare Services Investment Newsletter and The Microcap Newsletter, among others. Additionally, I have done freelance ghostwriting writing and editing for several financial websites, such as Seeking Alpha and Shmoop Financial. I have also written and been published on a variety of other topics from music, audiophile sound and film to musical instrument history, martial arts, and current events. Publications include Copper Magazine, Fidelity (Germany), Blasting News, Inside Kung-Fu, and other periodicals.