YieldMax’s MSTR Option Income Strategy ETF (MSTY) is a high-yield covered-call strategy tied to MicroStrategy (MSTR), a stock tied to Bitcoin’s price and with yields as high as 150% annually the big question is what return can investors expect over a 5-year time frame?
No matter which way we slice and dice it, MSTY’s initial yield is expected to decline over time as option premiums normalize.
The Bullish case forecasts persistently high volatility and strong Bitcoin gains while the Base case assumes moderate Bitcoin stability and declining volatility, and the Bearish case features a Bitcoin downturn with collapsing volatility and sharply lower income.
Below is a table comparing per-share dividends, year-end NAV, and cumulative total return (with reinvested dividends) for each scenario:
| Year | Bullish – Dividend ($) | Bullish – Ending NAV ($) | Bullish – Cumulative Total Return | Base Case – Dividend ($) | Base – Ending NAV ($) | Base – Cumulative Total Return | Bearish – Dividend ($) | Bearish – Ending NAV ($) | Bearish – Cumulative Total Return |
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 18.0 | 25.0 | +46% | 16.2 | 20.0 | +14% | 15.0 | 12.0 | –28% |
| 2026 | 22.0 | 30.0 | +279% | 10.8 | 20.5 | +97% | 6.0 | 8.0 | –14% |
| 2027 | 20.0 | 35.0 | +704% | 8.4 | 21.0 | +201% | 3.0 | 9.0 | +37% |
| 2028 | 18.0 | 38.0 | +1314% | 6.6 | 21.5 | +319% | 2.7 | 10.0 | +102% |
| 2029 | 15.0 | 40.0 | +2072% | 5.4 | 22.0 | +448% | 3.3 | 11.0 | +203% |
| 2030 | 15.0 | 42.0 | +3168% | 4.2 | 22.5 | +576% | 3.6 | 12.0 | +349% |
In a Bullish Bitcoin outlook, MSTY is slated to produce triple-digit yields and eye-popping compounding returns (over +3000% total by 2030 with reinvestment).
The Base case shows yields moderating by ~20% yearly, but still a healthy +500–600% total return over five years while the Bearish case sees an initial decline (NAV loss not fully offset by income (MSTY, MSTR Option Income ETF – YieldMax ETFs)) but still positive cumulative return by 2030 (+349%) due to reinvesting large early distributions at lower NAV.
Each outlook highlights MSTY’s income-generation power but also its NAV erosion risks – the fund’s upside is capped in rallies and downside is fully exposed.
The Bullish Outlook Is a Bitcoin Bull Market
Let’s say Bitcoin bolts into a strong multi-year bull market, supported by forces like increased institutional adoption or ETF approvals.
Assuming Bitcoin roughly quadruples by 2030 to reaching $150K+ and MicroStrategy’s massive BTC treasury, MSTR’s stock is expected to rise nearly in tandem.
A forecast that sees MSTR’s price climbing from ~$300 in April 2025 to roughly $600 by end-2025, and further to ~$1,000–$1,500 by 2030 (5× increase) seems reasonable. This path assumes periodic rallies and high volatility – consistent with prior crypto bull cycles.
In a raging bull market, option premiums will undoubtedly be elevated as traders pay up for upside exposure so MSTY can produce very high monthly income.
In 2025, as Bitcoin resumes its rally in a bullish scenario, MSTY’s payout stays around $1.3–$1.5 per month, totaling ~$18 for the year.
In 2026, with MSTR doubling again, implied volatility stays high in the 60–80% range, and MSTY’s distributions actually increase slightly so a forecast of ~$22 per share for 2026 representing 90% yield on the higher NAV is reasonable.
Thereafter, assume some decay in yield as the bull market matures, such as payouts drift lower from ~$1.7 to $1.25 per month by 2029–2030 annualizing to ~50% yield.
Even at reduced rates, this scenario sees far higher income than the other cases each year, and importantly, MSTY’s NAV will lag MSTR’s rise because the fund must sell upside calls, capping gains.
The forecast is for MSTY’s share price increases modestly from ~$20 to $25 by end-2025 in spite of MSTR rising by 100% or more, and further to ~$42 by 2030 versus MSTR ~$1500).
Much of MSTR’s price appreciation is distributed as income rather than retained in NAV, aligning with MSTY’s mandate of current income over growth.
The combination of moderate NAV growth and massive reinvested dividends yields explosive total returns. By reinvesting, an investor accumulates ever more shares during the high-yield period and it’s reasonable to estimate a +46% total return in 2025, accelerating to triple-digit annual gains in 2026–2028 as compounding kicks in.
Putting all the pieces together, the Bullish scenario has the potential to turn a $1,000 investment into over $32,000 by 2030.
To get there demands sustained volatility and compounding high yields exponentially to grow value. MSTY’s own track record shows a +216% cumulative return in just ~13 months since inception when Bitcoin rallied strongly.
The key risk is if Bitcoin soars more quickly than expected, MSTY may leave substantial gains on the table (calls sold will mean MSTY misses part of MSTR’s up-move).
The model calculations assume MSTY can capture at least some upside each month before being capped. Even so, the NAV cap means MSTY will necessarily underperform owning MSTR outright in a runaway bull but it compensates with outsized yield. The long and short of it is the Bull case paints MSTY as a yield-powered vehicle thriving on Bitcoin’s volatility, with reinvested dividends magnifying returns dramatically.
Base Case Scenario Is Bitcoin Is Fairly Rangebound
In the base case, Bitcoin trades in a broad, moderately volatile range such as ~$40K–$80K over the next few years, or maybe trends upward with each halving cycle.
Let’s roll forward with an outlook that by 2030 Bitcoin is higher than today, and sits in the range $70K–$100K, a modest rise.
MSTR would similarly move sideways to modestly upward and consider MSTR around $300–$450 range throughout, ending near ~$450 by 2030, reflecting MicroStrategy’s core business value plus a relatively stable BTC holding value.
With volatility moving lower, MSTY’s option income is going to decline steadily over time so a realistic decay curve starting from the current ~$1.33 monthly and shrinking by roughly 15–25% per year is fair. As a result, payouts might drop to around $1.00/month by the end of this year, ballpark $0.80 by end of 2026, and near $0.60 by 2027, and so on.
By 2030, monthly dividends may very well be in the ~$0.30 range, a level more typical of a mid-volatility covered call yield (~15–20% annualized on the ~$22 NAV).
This premise here is no severe crashes or spikes take place but instead a gradual waning of option premiums as the market settles.
The forecast shows annual dividends declining from $16.2 in 2025 to $4.2 by 2030 and MSTY’s NAV slater to remain roughly flat in this scenario.
Small MSTR price gains are largely offset by the fact that MSTY consistently pays out most income, as well as some principal as dividends.
A reasonable estimate is that MSTY’s share price stays in the $20–22 range through 2030 with little net appreciation as a consequence of the fund’s mandate to distribute income causing NAV stagnation.
Essentially, in a flat market MSTY will slowly eat into its principal to maintain payouts, as evidenced by its distribution including return of capital that can “decrease a fund’s NAV…over time.”
Even if dividends do tumble, reinvesting them will produce a strong cumulative return under this scenario. Early on, the still-high payouts of 100%+ in 2025, 50% in 2026, and so on boost share count.
By 2030, although the dividend rate is much lower, investors will hold significantly more shares. A reasonable forecast is for a ballpark 14% total return in 2025 and mid-double-digit in 2026, tapering to high-single-digit by 2029 as yields level off.
Summing it all up, a +575% return or 6.75× growth is reasonable by 2030, far above a scenario of just holding MSTR with no leverage.
The trade-off in base case is clear: MSTY outperforms MSTR on a total return basis thanks to income if MSTR merely goes sideways but if MSTR rises a bit, MSTY’s distributions + slight NAV uptick should roughly match or slightly lag the underlying’s total return.
In this situation assume call premiums gradually shrink as realized volatility eases, for example as implied vol drops to ~30–40% by 2030.
By the end of the period, MSTY’s yield-on-NAV might very well normalize to ~20%/yr which is still high by conventional standards, but much lower than today’s ~100%.
This highlights a core risk of “volatility decay” significantly reducing MSTY’s future payouts, even without a market crash. Investors really should expect distribution declines over time in the absence of another crypto frenzy. Still, the base case outcome is attractive in total return, assuming reinvestment of dividends remains a core part of the investing plan.
Bearish Scenario Is Bitcoin Bear Market
If a protracted Bitcoin bear market hits due to say a regulatory crackdown or waning adoption that then leads to a multi-year decline, Bitcoin’s price will surely drop sharply over the coming year and then languish at low levels. For example, Bitcoin falls toward the $20K–$25K range by 2026 in this case and remains there for several years.
As a result, MicroStrategy’s stock is at risk of plunging from around $300 to perhaps as low as double-digits, reflecting both BTC losses and investor capitulation.
Consider MSTR falling to around $100 by 2026 for a 66% loss, and then perhaps bumping up and down between $100 and $180 until 2030.
In a bear market, two opposing effects hit MSTY’s income, because while volatility spikes during the crash and can boost option premiums short-term, as was seen in early 2020 market shocks, the bear market grinding on will mean volatility and demand for calls nosedives.
It’s reasonable then to assume MSTY’s distributions to drop sharply. Still, this year shows a high annual payout of around $15 per share because the early part of the year benefits from the tail end of the previous bull’s premiums. But by late 2025, as Bitcoin slides, monthly payouts have the possibility of tumbling below $1.00.
We can suppose a 2026’s dividend of only around $6 for a near 60% decline from 2025. By 2027, with volatility low and MSTR stock near bottom, MSTY’s payout may very well reach perhaps $0.20–$0.25 per month or $2–$3 for the year.
We then consider some months with minimal income if MSTR stays flat and out-of-the-money calls expire worthless but bring little premium. From 2028 onward, if Bitcoin starts recovering slightly, volatility might uptick a bit to allow for a slight rebound in MSTY’s dividends to $2.7 in 2028 rising to $3.6 in 2030.
The long and short of it is option premiums “fall sharply” in this bearish scenario and MSTY’s annual distribution shrinks by around 80% from its current level.
MSTY’s NAV will no doubt be hit hard in the downturn and the fund is fully exposed to MSTR’s losses. For example, a drop from $20 to ballpark $8 NAV by 2026 in the forecast is built in and so income from call premiums cushions only a small portion of this decline. Worse still, those premiums themselves shrink as the price falls.
By 2026, MSTY has the potential to conceivably lose more than half its NAV, aligning with the fund’s warning that losses in MSTR may “not be offset by income.”
MSTY’s strategy might even accelerate NAV erosion in a prolonged bear because the fund pays monthly distributions likely funded partly by selling remaining holdings or return of capital when income is insufficient. The expected NAV bottoms around $8 to $9 and then recovers to around $12 by 2030 as MSTR recovers modestly.
Despite this dismal NAV picture, an investor reinvesting dividends may actually still see a positive cumulative return over five years. How? The key is that early on, MSTY is still paying very high distributions in 2025 and the investor is able to buy many additional shares at depressed prices in 2026–2027.
For example, the ballpark $15 of dividends in 2025 can be reinvested when MSTY’s NAV is collapsing to the teens or single-digits, substantially boosting share count.
Then when conditions stabilize by 2028–2030, the accumulated shares, even though each yields little income, represent a larger position to benefit from any small rebound.
The model shows an initial total return of –28% in 2025, a loss, since the late-year NAV crash outweighed income and still –14% by 2026. By 2027, the tide turns positive with approx. +37% cumulative, and by 2030 the total return reaches +349%. So $1,000 has the potential balloon to $4,490.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
