A lot of people are asking about the MSTY reverse split happening on 8 December, so here is a clear breakdown of what is actually going on and why it matters.
Let’s strip out the fairy dust and look at the mechanics.
What is happening
r/MSTY_YieldMax is doing a one for five reverse split. Five shares become one.
If you had 500 shares at $5 each, you now have 100 shares at around $25 each. The investment capital ($2,500 in this example remains unchanged)
Your total value does not change by a single cent. It is just the number of units and the price per unit being rearranged.
Why this is happening
Because MSTY’s unit price has bled down into the single digits, and the fund needs to reset the price higher to keep trading mechanics, spreads and options functioning cleanly.
But that is the surface level explanation.
The deeper reason is structural. MSTY and WNTR sell their upside exposure to MSTR in order to pay income. The high yield is not free. You hand over long term upside in exchange for short term distributions.
The result is simple maths
r/MSTR goes up and down in relation to r/Bitcoin. MSTY tracks the downside with only a partial exposure to upside. There is no mechanism built into the product that allows it to meaningfully recover NAV.
This is why reverse splits will not be a one off event. They are baked into the product design. and are a feature of all r/CoveredCallETFs.
What this means for investors
If you treat MSTY like a stock you can “buy the dip” on, you are fighting the structure. Bitcoin recovers. MSTR recovers. MSTY does not. or does not enough.
The strategy with MSTY and WNTR is not dip buying. It is active rebalancing. Managing decay, not chasing upside.
If you understand that, the whole product starts making sense.
If you do not, these reverse splits by r/YieldMaxETFs will keep surprising you.
If anyone wants the deeper maths behind NAV decay or the logic of rebalancing between MSTY and WNTR, happy to break it down.
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