Investors in New York City, New York have a new, actively managed ETF option available to them for generating income through options trading on a single stock, Advanced Micro Devices (AMD). The YieldMax AMD Option Income Strategy (AMDY) was launched on September 18, 2023, with the goal of providing an alternative strategy to owning AMD by utilizing a derivatives trading strategy to potentially maximize earnings on the single-name stock.

The fund, AMDY, operates with a specific focus on generating income for shareholders through short positions in both call and put options on AMD shares. By selling both calls and puts for AMD shares, the fund aims to generate monthly income while also holding US Treasury notes as collateral against the options strategy to maintain a certain level of cash income in the portfolio.

Reviewing the fund’s holdings, it is evident that AMDY maintains a strategy that includes short put positions around the $145/share strike price for AMD shares, as well as long call positions with similar strike prices. The fund also engages in short call positions at different strike prices and expiration dates, aiming to diversify its options strategy for income generation.

AMDY offers investors a monthly distribution that varies based on the strategy’s performance, with a forward distribution rate of 35.10% based on the most recent monthly distribution per share. This high distribution rate serves as an appealing feature of the ETF, especially considering that AMD shares do not provide a cash dividend to investors.

Despite the potential benefits of investing in AMDY, investors should be aware of certain risks involved in holding the fund. The strategy caps potential gains if AMD shares increase in value, while also posing the risk of losses if AMD shares decline in value and are not offset by income received. Additionally, the fund’s close tie to the underlying AMD stock may amplify risks, especially during periods of high volatility.

In conclusion, AMDY presents itself as a valuable tool for investors seeking exposure to AMD derivatives without the need to actively manage an options portfolio. While the fund carries inherent risks, particularly during market volatility, it can serve as a practical option for buy-and-hold investors looking to accumulate income while gaining exposure to the performance of AMD shares. A recommendation to consider AMDY with a BUY rating and a maximum allocation of 5% could provide investors with a strategic opportunity for income generation and exposure to AMD’s market performance.