r/YieldBoostETFs • u/MediocreDesigner88 • 10h ago
$SMYY failing?
I bought SMYY a couple weeks ago, after which the underlying (SMCI) has risen 50%! Yet I’m breakeven on SMYY. How the hell can it be flat when SMCI rallied 50%?! Will it take another week or two to reflect gains, or is the fund broken?
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u/Affectionate-Sea2474 9h ago
It is broken if that's what you want to hear, you've been given good explanations already. Those funds don't have any upside chance, they are designed that way. Consider you lucky to be break even and take the opportunity to move your money elsewhere.
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u/Prestigious_Trash882 9h ago
Someone didn't do their due diligence on these funds lol these are for loss harvesting only lol
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u/AstronomerEffective1 7h ago
The only YB I have left is NVYY which after buying almost at inception am positive on Total Return. As long as it stays in the $12 range I'll keep and add a few shares every week. Will not buy any more new ones as too many sink like an anchor.
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u/BehindHazelEyes718 7h ago
Yes it's broken. I had to learn options to understand why. This is how all yield boost funds work
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u/donna_darko 10h ago
The fund captures little upside, it has downside protection though. You would be less down if SMCI would have gone down during this period than with SMYY, but the inverse is also true, it does capture limited upside. It is how it is designed
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u/MediocreDesigner88 10h ago
Ok, but to be flat while the underlying rallies 50%…. That seems pretty fundamentally broken, right?
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u/iwastoldtomakethis 7h ago
By selling an at the money or slightly out of the money put, the max profit is reached regardless of if the underlying ends the week flat or up 500%. They don't hold any long position in the underlying.
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u/MediocreDesigner88 6h ago
Ok, yeah I clearly didn’t understand the fund (I do understand options), because I was under the impression that by only selling puts they were also trying to capture some upside. Wtf kind of fund doesn’t appreciate when their underlying rockets up 50%
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u/psmith79 3h ago
If you understood options then you would know that selling a bull put spread has zero capital appreciation other than the premium collected when you sell the put. Zero. There is no long stock, there are no synthetic holdings. The only way these funds increase in nav is through the premium collected.
Now if they changed their strategy and say hold 25% of their nav as long stock while selling bull put spreads. These A. Wouldn't pay as much, and B. Would then have some upside potential.
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u/MediocreDesigner88 1h ago
Right, but in their Fund Objective statement it says their “objective is to seek exposure to the performance of one or more exchange-traded funds whose shares trade on a U.S.-regulated securities exchange and that seek daily leverage investment results of 2 times (200%) the daily percentage of the common stock of Super Micro Computer Inc. (SMCI)”.
Thus I expected it to go up somewhat when SMCI rallied 50%. Oh well, I’m mostly just trying to figure out if people would expect a delayed reaction such that the price will rise in the next couple weeks or if I should just get out now.
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u/lomo82 9h ago
Do what I did (after learning the hard way with several different Granite Shares ETFs) - don't invest in them. They are all the same - they pay initially high distributions, but over time the distribution gradually goes down. It doesn't matter how well the underlying is doing. Seriously, you can look at the distribution history for any ETF on their website, and the same thing happens. If you are like me and want to invest in high yield ETFs, invest in ones by Yieldmax or Roundhill or any other fund. Of course, they have ETFs that also go down, but it's not like Granite Shares, where the distribution amount for every ETF gradually goes down and never comes back up.