YMAX: Why This High-Yield ETF May Have Found Its Bottom

The YieldMax Universe Fund of Option Income ETFs (YMAX) has captured the attention of income-seeking investors with its eye-popping distribution yields, but its price decline has raised concerns. After analyzing the recent performance and technical indicators, there's compelling evidence that YMAX may have found a bottom and now presents an attractive value opportunity.

A Fund of Funds with Significant AUM

YMAX operates as a "fund of funds," primarily investing in other YieldMax ETFs rather than directly in securities of individual companies. With assets under management (AUM) now exceeding $700 million, it has established itself as a significant player in the income ETF space since its launch in January 2024.

This substantial AUM indicates strong investor interest and provides the fund with stability and liquidity. The fund's growing asset base validates its approach and suggests institutional confidence in its strategy.

Technical Analysis Points to a Bottom

Recent price action shows YMAX forming a solid base around current levels. Technical indicators suggest the fund may have found support:

• The relative strength momentum indicator (RSI) is approaching 32, placing it in a neutral position and likely near a support level
• Price consolidation pattern forming after previous declines
• Trading volume patterns showing potential accumulation
• Current price action indicating a potential reversal of the downtrend

This technical setup is often seen at market bottoms before a recovery phase begins.

Impressive Yield Makes It a Compelling Value Play

YMAX offers an exceptional distribution yield, with recent distribution rates ranging from 57% to 68% according to various sources. The most recent distribution on May 2, 2025, contained 73.04% return of capital and 26.96% income.

While the high yield is eye-catching, it's important to understand that:

1. Distributions include a combination of dividends, capital gains, and return of capital
2. The fund switched to weekly distributions in September 2024
3. The yield strategy involves options income from underlying YieldMax ETFs

This distribution profile makes YMAX particularly suitable for income-focused portfolios in the current market environment.

Risk Management Through Diversification

Unlike single-stock option income ETFs, YMAX provides diversification across multiple YieldMax ETFs, each implementing options strategies on different underlying securities. This approach helps mitigate idiosyncratic risks associated with any single stock or sector.

The fund's equal-weighted strategy across various option income ETFs offers balanced exposure, reducing concentration risk while maintaining an aggressive income approach.

Current Price Presents Value Opportunity

At current price levels, YMAX represents a compelling value proposition for several reasons:

1. The price has stabilized after previous declines, potentially indicating a bottom
2. The extreme yield compensates investors while waiting for potential price appreciation
3. The fund's NAV erosion rate appears to be moderating
4. Market conditions for options strategies have been improving

Important Considerations

Investors should be aware that YMAX employs aggressive options strategies through its underlying ETFs. This approach caps potential upside in exchange for high current income and exposes the fund to potential NAV erosion during market downturns.

The fund carries a management fee of 0.29% plus acquired fund fees and expenses of 0.99%, for a total expense ratio of 1.28%. This fee structure should be considered when evaluating the total return potential.

Conclusion

YMAX appears to have found a bottom after its price decline and now presents an attractive value opportunity for income-focused investors. With over $700 million in AUM, a stabilizing price, and exceptional yield, it deserves consideration for income portfolios.

The technical formation of a solid base, combined with the fund's diversified approach to options income, positions YMAX well for potential recovery. For investors seeking high current income with some possibility of price stabilization or appreciation, YMAX offers a compelling risk-reward profile at current levels.

This analysis is based on current market data and technical indicators. All investments carry risk, and past performance is not indicative of future results.

Continuing Our Success with LYFT: Why We're Doubling Down on Our Strategy

At SharkWater Trading, we've consistently identified valuable trading opportunities with Lyft, Inc. (NASDAQ: LYFT), and recent market developments are reinforcing our conviction. As LYFT released earnings on May 8th, we've seen compelling signals that suggest our trading strategy should continue to deliver strong results for our clients.

Recent Performance Confirms Our Thesis

Today was solid proof of our conviction in LYFT with a 20% jump.

LYFT stock has demonstrated impressive momentum recently, climbing approximately 13.35% over the past two weeks. The stock has risen in 8 of the last 10 trading days, with increasing volume – a positive technical indicator that supports our bullish outlook.

Our technical analysis confirms buy signals from both short and long-term moving averages, with the short-term average comfortably positioned above the long-term average. This positive alignment has been a consistent indicator in our previous successful trades.

Fundamental Catalysts Supporting Our Position

While SharkWater Trading primarily employs technical strategies, we never ignore the fundamental picture. Several key developments are supporting our LYFT position:

1. Path to Profitability: After years of losses, LYFT is positioned to achieve profitability in 2025. The company has significantly narrowed its losses, with Q4 2024 showing record results and the announcement of a $500 million share repurchase program.

2. Strategic Innovation: LYFT's product innovations, particularly its Price Lock plan for commuters, are driving customer loyalty and steady revenue streams. The company has also reduced its reliance on surge pricing – a move that's improving customer satisfaction and retention.

3. European Expansion: LYFT's recent $197 million acquisition of FREENOW represents its most significant international expansion yet, opening access to over 150 cities across nine European countries. This move substantially increases LYFT's total addressable market.

4. Attractive Valuation: Despite recent gains, LYFT continues to trade at compelling multiples. With a forward P/E ratio around 16 and analysts forecasting continued revenue growth, the stock remains undervalued compared to its growth prospects.

Our Trading Strategy Moving Forward

Our disciplined approach to LYFT has delivered consistent returns, and we're maintaining our core strategy while making tactical adjustments:

• Momentum Trading: We're capitalizing on the stock's positive price action with carefully timed entries following price consolidations.

• Options Strategies: For qualified clients, we're implementing call option positions with 30-60 day expirations to maximize leverage on the anticipated upward movement.

• Risk Management: While our outlook is positive, we're implementing strict stop-loss orders at key technical support levels ($12.17 has been identified as a critical threshold).

Why This Matters

The rideshare industry continues to expand, with LYFT positioned as a strong number two player in North America and now expanding internationally. As the company transitions from growth-at-all-costs to sustainable profitability, we believe the market will continue to revalue the stock higher.

LYFT's upcoming earnings report may serve as a catalyst for the next leg of price appreciation. While past performance doesn't guarantee future results, the confluence of technical signals, fundamental improvements, and favorable industry positioning gives us confidence in continuing our successful LYFT trading strategy.

Disclaimer: This blog post is for informational purposes only and does not constitute investment advice. All trading carries risk. Past performance does not guarantee future results.

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SharkWater Trading provides technical and fundamental analysis for active traders. Contact us for personalized trading strategies tailored to your investment goals.

Lyft Shares Accelerate on Strong Earnings and Buyback Announcement

Ride-sharing giant Lyft (NASDAQ: LYFT) saw its shares surge today following a double dose of positive news that has investors hitting the gas pedal on the stock.

The San Francisco-based company announced quarterly earnings that exceeded Wall Street expectations, with revenue climbing 15% year-over-year to $1.38 billion. This impressive top-line growth was accompanied by expanding profit margins, as Lyft reported adjusted EBITDA of $124 million—a substantial 32% increase from the same period last year.

Perhaps more significantly, Lyft's board authorized a substantial $1 billion share repurchase program, signaling management's confidence in the company's financial position and future prospects. This marks Lyft's first major buyback initiative since going public in 2019.

CEO David Risher highlighted the company's strategic focus during the earnings call, stating: "Our disciplined approach to cost management coupled with continued growth in active riders has put us in a position of financial strength. The board's authorization of this buyback program reflects our confidence in Lyft's long-term value creation potential."

The announcement comes at a pivotal time for Lyft, which has been working diligently to narrow the market share gap with its larger competitor Uber. Recent initiatives, including enhanced driver incentives and an improved user interface, appear to be gaining traction with consumers, as evidenced by the 12% year-over-year increase in active riders reported this quarter.

Wall Street analysts reacted positively to the news, with several firms upgrading their price targets for the stock. The combination of operational improvements, strong financial performance, and the share repurchase program creates a compelling narrative for potential investors.

For traders monitoring the rideshare sector, today's move represents a significant technical breakout for Lyft shares, which had been consolidating in recent months. The stock closed up 19% on heavy volume, suggesting strong institutional interest.

Whether this momentum can be sustained will likely depend on Lyft's ability to continue growing market share while maintaining profitability—a balancing act that has challenged the company in previous quarters. However, today's announcement suggests management believes they've found the right formula for long-term success.

As always, the SharkWater team will continue monitoring developments in this space and provide updates as the situation evolves.

REITs Bounce Back: A Prime Dividend Opportunity Since Early April

The REIT sector has been showing impressive resilience since April 2nd, creating what many investors are recognizing as an excellent buying opportunity for dividend-focused portfolios. After navigating through challenging conditions earlier this year, REITs are demonstrating strong fundamentals that make them particularly attractive in the current market environment.

Strong Earnings Drive Sector Recovery

Recent earnings reports from key mortgage REITs have exceeded expectations, with AGNC Investment Corp. (AGNC) and Orchid Island Capital (ORC) both delivering solid performance metrics. These positive results have helped strengthen investor confidence in the broader REIT market, pushing valuations upward while maintaining the attractive dividend yields that make REITs a favorite among income investors.

AGNC's performance has been particularly noteworthy, with management highlighting stable book values and effective hedging strategies that have protected against interest rate volatility. Similarly, ORC has demonstrated resilience in its portfolio management, allowing it to maintain its dividend distribution despite previous market uncertainties.

Why REITs Are Worth Your Attention Now

Several factors make the current REIT landscape especially attractive:

1. Higher-Than-Average Dividend Yields: Many REITs in the sector are offering yields significantly above market averages, creating compelling income opportunities.

2. Discounted Valuations: Despite recent gains, many quality REITs are still trading below their historical price-to-book ratios, suggesting further upside potential.

3. Interest Rate Stability: As market expectations about future rate movements have become more clear, REITs have found more stable footing.

4. Sector Diversification: The REIT market offers exposure to various real estate segments, from residential and commercial to specialized sectors like data centers and healthcare facilities.

Building Income Through REIT Dividends

For investors looking to generate reliable passive income, the current REIT environment presents a strategic opportunity. Many investors are finding success with a basket approach, allocating across several REIT types to create a diversified income stream while mitigating individual company risk.

The mortgage REIT subsector, where companies like AGNC and ORC operate, has been particularly generous with dividend distributions. These companies typically offer higher yields than equity REITs, though they come with different risk profiles that investors should understand before allocating capital.

Looking Forward

While no investment comes without risk, the fundamental improvements in the REIT sector since early April suggest that the current recovery has room to run. Investors seeking income in today's market would be wise to evaluate REITs as a potential component of their dividend strategy.

As always, individual research and due diligence remain essential, particularly regarding each REIT's specific portfolio composition, management team quality, and dividend sustainability. The current market presents opportunities, but selectivity remains key to long-term success.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice. All investments involve risk, including the possible loss of principal. SharkWaterTrading.com and its authors may hold positions in securities mentioned in this post.

Published by SharkWaterTrading.com on April 25, 2025

E.L.F. Beauty Options: Capitalizing on Premium While Momentum Continues

The remarkable run of e.l.f. Beauty (ELF) continues to present attractive opportunities for options traders focused on premium selling strategies. As the cosmetics powerhouse maintains its upward trajectory, strategic options positions can help traders extract value from both the stock's momentum and elevated implied volatility.

Understanding E.L.F.'s Current Market Position

E.L.F. Beauty has established itself as a standout performer in the beauty sector, with its affordable yet high-quality products resonating strongly with younger consumers. The company's digital-first approach and nimble product development cycle have translated into consistent revenue growth and margin expansion, reflected in the stock's impressive performance.

Why Options Premium Remains Elevated

Several factors contribute to the rich premium environment in ELF options:

1. Growth Expectations: The market continues to price in significant growth potential, increasing the implied volatility component of options pricing.

2. Sector Volatility: The consumer discretionary and beauty sectors have experienced heightened volatility, further elevating option premiums.

3. Earnings Anticipation: Quarterly results have historically triggered substantial price movements, keeping implied volatility elevated even between reporting periods.

Premium Selling Strategies to Consider

1. Cash-Secured Put Strategy

For investors looking to establish positions at lower price points while generating income, selling cash-secured puts below current market prices offers an attractive entry strategy. This approach allows you to:

• Collect substantial premium due to elevated implied volatility
• Potentially acquire shares at an effective discount if assigned
• Generate returns even if the stock continues trading sideways

2. Covered Call Approach

For current ELF shareholders, the covered call strategy provides a method to enhance yield while maintaining exposure to the stock's potential upside:

• Select strike prices above your cost basis that still allow for meaningful capital appreciation
• Consider implementing a laddered approach with multiple expiration dates
• Roll positions forward to capture additional premium if the stock approaches your strike price

3. Credit Spreads for Defined Risk

For traders seeking more defined risk parameters, vertical credit spreads can provide exposure to ELF's premium environment while capping potential losses:

• Bull put spreads position you to profit from continued strength or sideways movement
• Select spread widths that balance premium collection with acceptable risk tolerance
• Consider positioning around key technical support levels for additional protection

Risk Management Considerations

While ELF's premium environment presents attractive opportunities, prudent risk management remains essential:

• Size positions appropriately relative to your overall portfolio
• Consider implementing stop-loss strategies for directional positions
• Be mindful of upcoming earnings dates and other potential catalysts
• Diversify across multiple expiration cycles to mitigate time-specific risks

Conclusion

The continued elevation of E.L.F. Beauty stock, coupled with rich options premiums, creates a compelling environment for options income strategies. By systematically selling premium through carefully structured positions, traders can potentially generate attractive returns while managing downside exposure in this high-momentum name.

Remember that all options strategies involve risk, and individual positions should be tailored to your specific financial situation, risk tolerance, and investment objectives.