GraniteShares YieldBOOST SPY ETF (YSPY)

GraniteShares YieldBOOST SPY ETF arrived on the market in February 2025. Ticker YSPY. NASDAQ. The fund’s strategy is deceptively simple: sell put options on a 3x leveraged SPY ETF, collect the premiums, distribute them weekly. On the surface, it sounds like a variation on other yield-enhancement strategies. It is not.

The leveraged-ETF angle is critical. When you sell puts on a regular SPY (the S&P 500 ETF), you collect moderate premiums because the underlying is not particularly volatile. When you sell puts on a 3x leveraged SPY—an ETF that amplifies daily moves in the S&P 500 by three times—the premiums are enormous. Three times the volatility means three times the option premium. This is where the fund’s high yield comes from. It is not magic; it is leverage feeding volatility feeding option premiums. The fund does not itself own the leveraged ETF. It collects the income from selling options on it and holds U.S. Treasuries as collateral.

The result: a fund distributing yield in the range of sixty percent annually. This is eye-watering. It is also not sustainable at that level, and it carries risks most retail investors do not fully grasp.

The mechanics. Each week, the fund’s managers select strike prices for the puts they will sell. The strikes are set in a band from forty percent out of the money to ten percent in the money. Out of the money means the strike is below the current price—a low probability of being exercised in that week. In the money means the strike is above the current price—a higher probability of assignment. The wider the range, the more flexibility the managers have in calibrating how much risk they are taking on in any given week.

Premium arrives upfront. If the leveraged-ETF price stays above all the put strikes through the week, the puts expire worthless, the fund keeps the full premium, and it flows to shareholders. Assignment happens if the price falls below a strike. Then the fund is obligated to buy the leveraged ETF at that strike price—locking in a loss if the current market price is lower. The Treasuries provide collateral. The premiums cushion the losses but rarely cover them fully in sharp declines.

What the fund is really doing: it is a synthetic short on a leveraged bull position. It is capping gains if the S&P 500 rises and amplifying losses if it falls. The high yield comes from selling the right to loss-making downside to option buyers. In a bull market, the fund underperforms because it cannot participate in the rally beyond a certain threshold. In a bear market, the leverage in the underlying flips the losses: a twenty percent drop in the S&P 500 means a sixty percent drop in the 3x leveraged ETF, and the fund is holding puts at strikes that have been blown through. The premiums do not offset that.

Performance since launch (February 2025) shows the fund up twenty-three percent through the first year, with distributions around sixty percent yield. This tells you that the fund has been in a bull-market environment where implied volatility on the leveraged ETF remained elevated. The premiums held up. The capped upside was not yet a regret because the market kept going up and the puts kept expiring out of the money.

The risk calculus. The fund sells the right to benefit from rallies in exchange for current income. It is a classic yield-seeking trade, and it works until it does not. The moment the S&P 500 rolls over, leverage inverts. A fund that was distributing sixty percent while the market rallied will distribute much less (or nothing) while the market is falling, and it will have accumulated losses that dwarf the premiums collected. The fund’s prospectus discloses that potential losses can be “nearly as large” as owning a short position on the underlying index. This is not hyperbole. The fund is a levered short, dressed as an income vehicle.

Volatility decay is the secondary risk. The high yields depend on elevated implied volatility in the options markets. In a quiet bull market where the S&P 500 drifts higher with low turbulence, the premiums on short-dated options fall, and the yield collapses. Investors chasing the sixty-percent yield may find it become a twenty-percent yield very quickly if sentiment shifts and realized volatility drops.

Audience. This is not a fund for core holdings or for buy-and-hold investors. It is explicitly a tactical income generator for investors who expect a certain regime—either sideways trading or a decline in the S&P 500, with elevated volatility. It is most appropriate for investors with options-market experience, who understand leverage, and who can stomach the drawdowns. It is a tool for trading, not investing.

Assignment and path dependency create another layer of risk. The fund’s losses depend not just on where the market ends, but on the path it takes to get there. A sharp, sudden drop that triggers assignments at unfavorable levels early in the life of the options can burn through the premium cushion before the market recovers. Conversely, a gradual decline that keeps puts at the edge of the money (and vulnerable to assignment) over several weeks can force the fund to take loss after loss, with no relief from declining volatility or a reversal. This path dependency makes the fund’s outcomes less predictable than a simple long or short exposure.

How to research. Read the fund’s prospectus. Know exactly what strike prices are being sold in any given week and understand the gap between those strikes and the current price. Track the implied volatility on the options to see if the premiums are sustainable. Compare the fund’s total return (including distributions) across a full market cycle—not just bull markets—against a simple S&P 500 ETF and against leveraged inverse ETFs like the Direxion 3x Inverse SPY ETF (SPXS). Ask yourself whether the complexity and the risks of a leveraged put-selling strategy are worth the extra income relative to simpler alternatives.

If you own this fund, set a drawdown threshold. In a correction, losses can accelerate quickly. Know the level at which you would exit. Do not assume the distributions will sustain you through a downturn. They will not.