YieldMax BABA Option Income Strategy ETF (BABO)

The YieldMax BABA Option Income Strategy ETF is an actively managed fund from YieldMax ETFs that seeks to generate monthly income while providing some exposure to the share price of Alibaba Group (BABA).

The fund uses a synthetic covered call strategy: it creates long exposure to Alibaba's American depositary shares through a combination of call and put options, and sells call options on that exposure to collect premium income. It holds U.S. Treasury securities as collateral and does not own Alibaba shares directly. Because of the call options sold, the fund's participation in Alibaba's price gains is capped, while it remains exposed to most of the stock's declines.

Alibaba Group, based in Hangzhou, China, runs e-commerce marketplaces such as Taobao and Tmall, a large cloud computing business and logistics operations.