The YieldMax TSLA Option Income Strategy ETF is a fund that utilizes a synthetic covered call strategy to generate income. It is important to note that investing in the fund is not equivalent to investing in Tesla (TSLA) directly. The fund's strategy is designed to cap potential gains if TSLA shares increase in value, while subjecting the fund to all potential losses if TSLA shares decrease in value, which may not be offset by income received by the Fund. Moreover, fund shareholders are not entitled to any TSLA dividends.

As part of its synthetic covered call strategy, the fund purchases and sells a combination of standardized exchange-traded and Flexible Exchange® (FLEX) call and put option contracts that are based on the value of the price returns of TSLA. Standardized exchange-traded options come with standardized terms, while FLEX options are exchange-traded but allow for customizable terms, such as the strike price. The fund's options contracts are based on the value of TSLA, giving the fund the right or obligation to receive or deliver shares of TSLA on the expiration date of the applicable option contract in exchange for the stated strike price, depending on whether the option contract is a call option or a put option, and whether the fund purchases or sells the option contract.

The fund's synthetic covered call strategy seeks to replicate 100% of the price movements of TSLA through the use of various investment instruments, but without owning the underlying security. The strategy consists of the following three elements:

Synthetic Long Exposure: To achieve a synthetic long exposure to TSLA, the fund buys TSLA call options and simultaneously sells TSLA put options. The call options purchased by the fund and the put options sold by the fund will generally have six-month to one-year terms and strike prices that are approximately equal to the then-current share price of TSLA at the time the contracts are purchased and sold, respectively. The combination of the long call options and sold put options provides the fund with investment exposure equal to approximately 100% of TSLA for the duration of the applicable options exposure.
Covered Call Writing: As part of its strategy, the fund will write (sell) call option contracts on TSLA to generate income. Since the fund does not directly own TSLA, these written call options will be sold short (i.e., selling a position it does not currently own). The call options written (sold) by the fund will generally have an expiration of one month or less (the “Call Period”) and a strike price that is approximately 5%-15% above the then-current TSLA share price at the time of such sales. It is important to note that the sale of the TSLA call option contracts will limit the fund's participation in the appreciation in TSLA’s stock price. If the stock price of TSLA increases, the synthetic long exposure alone would allow the fund to experience similar percentage gains. However, if TSLA’s stock price appreciates beyond the strike price of one or more of the sold (short) call option contracts, the fund will lose money on those short call positions, and the losses will, in turn, limit the upside return of the fund’s synthetic long exposure.
U.S. Treasuries: U.S. Treasuries are used for collateral for the options and also generate income.

To achieve synthetic long exposure to TSLA, the fund buys TSLA call options and simultaneously sells TSLA put options to try to replicate the price movements of TSLA. The call options purchased by the fund and the put options sold by the fund generally have six-month to one-year terms and strike prices that are approximately equal to the then-current share price of TSLA at the time the contracts are purchased and sold, respectively.

As part of its strategy, the fund writes (sells) call option contracts on TSLA to generate income. Since the fund does not directly own TSLA, these written call options will be sold short. The call options written (sold) by the fund generally have an expiration of one month or less and a strike price that is approximately 5%-15% above the then-current TSLA share price at the time of such sales.

It is important to note that the sale of TSLA call option contracts will limit the fund's participation in the appreciation in TSLA's stock price. If the stock price of TSLA increases, the synthetic long exposure alone would allow the fund to experience similar percentage gains. However, if TSLA's stock price appreciates beyond the strike price of one or more of the sold (short) call option contracts, the fund will lose money on those short call positions, and the losses will, in turn, limit the upside return of the fund's synthetic long exposure. As a result, the fund's overall strategy, i.e., the combination of the synthetic long exposure to TSLA and the sold (short) TSLA call positions, will limit the fund's participation in gains in

Investors should carefully consider the risks associated with investing in the YieldMax TSLA Option Income Strategy ETF, including the risks associated with options trading, the fund's use of leverage, and the risk that the strategy may not produce the intended results. The fund's performance may be influenced by factors such as changes in market conditions and the volatility of the options market.