This article first appeared on GuruFocus .
The YieldMax SMCI Option Income Strategy ETF ( SMCY , Financials ) is an actively managed fund created on exposure to Super Micro Computer, and investors are getting an eye-catching income stream from it. YieldMax shows the fund's distribution rate as 100.90%.That number need some background. SMCY doesn't get that cash via regular dividends. The fund offers call spreads on Super Micro Computer Inc. and collects option premiums off the volatile server maker's share price for weekly payouts.The last dividend was $0.105 per share, announced Sept. 9 and to be paid Sept. 11. So like 98% of the distribution or so was return of capital.This is an important distinction because the distribution rate is not the same as the investment yield. SMCY's 30-day SEC yield was a mere 1.83% as of Aug. 31. But Super Micro has given the approach plenty of instability to work with.AI server provider estimated fiscal 2027 sales of $65 billion to $72 billion, considerably above Wall Street projections, as data-center customers continue spending substantially on artificial intelligence infrastructure.That increase can support interest in SMCI and its option premiums. For investors, SMCY is a compromise. The fund can pay out large weekly cash dividends, but distributions can include returned capital and the options method can limit some upside if Super Micro shares rally.
