2 Reasons You May Want to Swap Coinbase for CONY

However, those are just paper gains

If you are holding Coinbase Global, you would need to sell the stock in order to realize any income

This ETF gives you access to some (but not all) of the upside potential of Coinbase stock, while simultaneously giving you a steady monthly income

Let's take a closer look at why you might want to swap Coinbase for CONY

As the name of this ETF suggests, the primary goal here is to maximize yield

Using financial derivatives, the ETF transforms a non-yield-bearing asset (Coinbase stock) into a yield-bearing asset (the CONY ETF)

This ETF pays out a monthly distribution, which is measured in terms of a "distribution rate. " The higher the distribution rate, the more income you receive on a regular basis

Within the offering spectus, you can see exactly the timing, schedule, and amounts of prior distributions

That's considerably higher than the distribution rates for other ETFs in the YieldMax family

Obviously, this yield-generating strategy requires a bit of financial alchemy to work perly

After all, money does not grow on trees

In this case, the YieldMax COIN Option Income Strategy ETF uses a synthetic covered call options strategy

The good news here is that all of this happens behind the scenes, so you don't need to know anything options or options strategies

In fact, it makes life simpler if you think CONY as a "1-stock ETF. " Just keep in mind, though, that you do not own the underlying Coinbase stock in the ETF

You only own access to the options position on Coinbase stock that is generating the monthly income

Why should investors buy CONY instead of COIN

Putting all this together, it's possible to come up with two good reasons why you might want to buy the YieldMax COIN Option Income Strategy ETF instead of Coinbase Global stock

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The most important reason, of course, is the opportunity for monthly income (i. , the monthly distribution)

If you own the stock outright, you would not be receiving a monthly dividend or any other kind of cash payment

The second big reason to buy the ETF rather than the stock is if you are neutral or moderately bullish on Coinbase

In other words, you're not expecting it to skyrocket in value anytime soon

You're quite content to generate monthly cash flow, while Coinbase stock trades within a fairly narrow range

I can't emphasize this enough: You should only buy the ETF if you do not expect the price of Coinbase to skyrocket in value

Otherwise, you'd be giving up quite a bit of upside potential

You'd still be making money each month, but you'd potentially be leaving some money on the table

Is CONY right for you

The YieldMax ETF is generating yield with options

If you've never traded options before, I would highly recommend becoming at least moderately familiar with the payout chart of a covered call strategy

By referencing this payout chart, you should be able to recognize the scenarios when CONY will perform better than COIN

At the end of the day, deciding to buy the YieldMax COIN Option Strategy ETF instead of Coinbase Global stock requires a trade-off

In exchange for sacrificing some of the upside potential of Coinbase, you are getting access to monthly cash flow

If Coinbase trades flat or only moderately higher, you stand to do better than if you were holding Coinbase stock

Dominic Basulto has no position in any of the stocks mentioned

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