ABNY

ABNY (YieldMax® ABNB Option Income Strategy ETF) is an Exchange-Traded Fund created by Tidal Financial Group that sells synthetic covered call options on Airbnb, Inc. (ABNB) to provide high weekly income. It is part of the YieldMax® brand of funds, and more specifically, the YieldMax® Single Stock Option Income ETFs family.

History

The YieldMax® ABNB Option Income Strategy ETF was launched on June 24, 2024. The fund was created as part of the broader suite of YieldMax® Single Stock Option Income ETFs, which are designed to provide investors with high current income from the options premiums of individual, high-profile stocks.

The creation of ABNY was driven by investor demand for income strategies based on popular, high-growth companies like Airbnb, Inc. (ABNB), allowing them to generate cash flow from the stock's volatility without directly owning the shares.

While the Net Asset Value (NAV) at inception is typically around $20 for new YieldMax ETFs, the first recorded closing price for ABNY in public data was $20.49 in late June 2024. Like other funds in its family, ABNY's price is not designed for long-term capital appreciation and will decline over time as a result of its income-focused options strategy and distributions that may include a Return of Capital.

How ABNY Works

ABNY is an income-focused ETF that aims to pay weekly cash to investors by copying the movement of Airbnb (ABNB) stock without owning any actual shares. It does this by building a “synthetic stock” using two options: it buys a call option (which gains value if the stock rises) and sells a put option (which loses value if the stock drops). These options are structured in a way that mimics the performance of owning the actual stock, a method known as creating a synthetic long position.

These options are purchased from professional trading firms called market makers through public exchanges, and the trades are guaranteed by the Options Clearing Corporation (OCC), which ensures that both sides settle gains and losses correctly. Market makers do not take a side or bet on the direction of the stock. They remain neutral by hedging their positions - usually by buying or selling actual shares of the stock in the background - to manage their risk. They profit from trade volume and the difference between bid and ask prices (called the spread).

Once ABNY has this synthetic exposure, it generates income by selling short-term call options (usually weekly) to traders, who pay a cash fee (called a premium) to bet on the stock going up. These premiums are collected by ABNY and then distributed to ABNY shareholders as cash payouts, sometimes referred to as “dividends,” although they may include return of capital (RoC). These call options are sold at open options market. ABNY receives whatever premium the market is offering at the time.

If the stock rises above the strike price, the trader profits and ABNY’s gains are capped, since it gave up that upside in exchange for the premium. This limits ABNY’s potential gains during strong upward moves in the stock. If the stock drops, the trader only loses their small premium, but ABNY loses value in full, just like someone who owns the stock. The synthetic stock position mirrors the downside as if ABNY held the actual stock, meaning it can experience significant losses in a downturn. When this happens, any weekly distributions to investors may consist partly or entirely of return of capital rather than earned income.

Meanwhile market makers are not betting on the direction of the stock - they manage their risk by buying or selling real shares in the background to stay neutral (a process called hedging). They are paid up front through the option premiums and can use existing inventory or cash to fulfill the trade. However, this is part of the standard function of options markets and not a special arrangement with ABNY. The ETF simply accesses liquidity that already exists in the market, and market makers participate for the usual reasons: spreads and volume.

When ABNB stock rises, ABNY gains value from the synthetic position and uses that gain to pay the trader (if applicable). While this phrasing suggests a direct payment, in reality, if the call options sold by ABNY end up in the money, the fund settles those obligations through the clearinghouse. This results in giving up potential profits rather than literally paying traders from ABNY’s own capital. When the stock falls or crashes, ABNY pays the full loss into the clearinghouse, and the OCC passes that money to the market maker who held the other side of the contract.

ABNY does not directly pay market makers a premium or commission. It purchases options at market prices on public exchanges, and market makers may profit indirectly via bid-ask spreads or hedging efficiency.

Similarly, traders do not pay ABNY directly. The call premiums are market-determined and collected through the exchange mechanism, not negotiated transactions.

The synthetic stock position means that ABNY is fully exposed to downside risk, just like owning ABNB stock outright. This risk is not hedged.

The high income distributed by ABNY is attractive but not guaranteed, and investors may experience principal erosion over time if ABNB underperforms or enters a prolonged downturn.

The system works because traders want leveraged upside exposure, ABNY wants income, and market makers want volume and spreads while remaining fully hedged. Specifically, traders want a cheap way to simulate owning the stock when they expect a strong move upward after volatility, so they pay a relatively small premium to ABNY for the chance at uncapped profits if the stock rises, while limiting their loss to just that premium if the stock falls. This setup appeals to traders with a short-term bullish outlook.

ABNY wants this setup because it collects those premiums and uses them to fund high-income distributions (sometimes called dividends) for its ETF shareholders. However, these payouts are not guaranteed and may vary week to week depending on how much premium ABNY can collect and how the underlying stock performs. In periods of market stress or when the stock underperforms, income may decline and distributions may include investors’ original capital. Investors should understand that while the income may appear attractive, the strategy comes with real risks to the underlying value of the ETF, especially during prolonged market declines.

Market makers, in turn, want these trades because ABNY pays them a premium (like a commission) for the long-term option contracts used to create synthetic stock exposure, and the market makers can safely hedge their risk using real shares or other tools while profiting from trade volume and bid-ask spreads. While the explanation likens this premium to a commission, it's more accurate to say that ABNY buys options at market prices and market makers benefit indirectly from facilitating those trades as they would for any market participant.