Summary Bitcoin’s long-term bullish outlook supports leveraged income ETFs like Roundhill COIN WeeklyPay ETF over covered-call strategies such as YieldMax COIN Option Income Strategy ETF. COIW benefits from active leverage management, balancing risk and upside capture better than CONY. CONY underperforms in flat or volatile markets, offering limited drawdown protection and weak upside participation. Overall, COIW is a Hold with better risk-reward; CONY is downgraded to Sell. As I look at Coinbase and its two different income generating wrapper ETFs, let me summarize my findings across my analyses on income plans and cryptocurrencies so far. My previous analyses in the bitcoin space and option based income plans have mostly concluded thus. One, bitcoin is going through a structurally supportive phase (therefore read bullish). Two, leveraged income strategies are better than covered call option based strategies in most cases - they are simpler and perform in the long run. The only thing they need is a long term bullish thesis on the underlying. And three, those option based income plans do better, that either save drawdowns significantly or capture upsides better - usually option ETFs do either of these well, not both, and they should be used tactically for their strengths. Some option strategies do neither, and needless to say are best avoided. In the crypto space, a spate of supportive legislations like the GENIUS and CLARITY Acts could bring in required transparency as increased crypto adoption drives demand. Recent news around funding for Strategic Bitcoin Reserve ( SBR ) starting anytime soon, for example, lends support to wider institutional recognition of bitcoin as a strategic asset, including state entities. A leveraged asset like the Roundhill COIN WeeklyPay ETF ( COIW ) needs to have a bull thesis on the underlying Coinbase in the long term to work out. Bitcoins do look like meeting that long term bullish thesis criteria. How about Coinbase? The Underlying Thesis - Coinbase In my last article about the option income ETF based on Coinbase - the YieldMax COIN Option Income Strategy ETF ( CONY ) - I have taken a cautiously bullish stance on Coinbase. That still holds. On the positive side, I like Coinbase's strategic positioning through the Deribit acquisition, making Coinbase one of the leading derivatives players in the crypto space. USDC based payments enablement and integration with Shopify and Stripe move Coinbase into payments infrastructure - more revenue diversification. The structurally supportive crypto ETF inflows also support long term crypto led growth for Coinbase. I ended up with a tactical Hold rating because of Coinbase's high beta, volatility, valuation concerns, and momentum-driven nature. Long term investors in COIW will need a bullish long term thesis in COIN. Unfortunately, the crypto space is still maturing, and a long term thesis is not really as foolproof as, say, in big tech. However, bitcoin is bullish long term. COIN should mature and stabilize along with that growth and expect no regulatory or competitive threats over the next few years. So, I would still position COIN as a cautious Buy - or Hold tactically for medium term investors. CONY's Stronghold In my earlier CONY analysis, I have shown how CONY is not the greatest option income performer even in what can be called flat markets end to end - this is because such flat markets for Coinbase are often extremely volatile, wherein CONY manages to lose several percentage points (9-10 percentage points) even when COIN is relatively flat at 2% on a close to close basis. The data below shows a flat period over a year, with upsides of up to ~80% in between. Data by YCharts The reason why CONY fails to do well in such prolonged and volatile but flat markets on a closing basis is the volatility and its inability to catch up with sharp upsides in COIN. In the below chart, we can see CONY's total returns are less than half of what has been a sharp rally in Coinbase. And this is expected - some option income ETFs write calls on smaller parts of the portfolio and capture upsides better through active management, not CONY. Data by YCharts But does CONY's upside underperformance get compensated on drawdowns? It does. For a prolonged drawdown period between December 2024 to April 2025, CONY saves 4-5 percentage points in total returns than COIN. However, the drawdown mitigation is not even close to the kind of opportunity loss we see on upsides. The net result is that CONY suffers even in flat markets - tracing almost all of the drawdown but capturing less than half of any upside run. Data by YCharts Scenarios and Why Leverage is Better CONY's apparently underlying-agonistic strategy does promise alpha and income even if the underlying does not move or undergoes mild corrections, in theory - however we have seen how that is not the case in real market conditions. CONY seems to need a bull thesis as much as the perceived underlying dependency of a straightforward strategy like COIW's, where a 20% leverage is applied on weekly returns. Before we move on to scenarios, I want to clarify that a 20% leverage is more conservative than it sounds. If say Coinbase crashes by 10% in two consecutive weeks, the total drawdown is 19% at the end of two weeks. COIW will be down by 12% each week i.e. 22.56% down in the same period. Now 22.56% is only 18.7% of the 19% drawdown in Coinbase cumulatively (not 20% as may seem apparent). This impact magnifies as we continue to compound returns or drawdowns over weeks. Now, even ignoring that more conservative than the headline 20% leverage, I have constructed three scenarios and compared COIW and CONY. Scenario 1: Coinbase corrects by 50% in 6 months - Here expect CONY to be down by ~45% as we have seen before. COIW will be down by 60% (assuming no compounding effect, while in reality the true drawdown should be closer to 55%). CONY definitely works in this scenario, but the gap with COIW is not huge. Scenario 2: Coinbase remains flat for 6 months - We have seen that unless Coinbase's volatility subsides, CONY is likely to be down by 5-10%. COIW should be flat. So even in neutral circumstances, COIW seems a better proposition than CONY's covered call mechanism. Scenario 3: Coinbase rallies by 50% in 6 months - CONY captures 25-30% of this rally at best. COIW rallies 55-60%. The difference here is much more material than the risks on the downside. Get a Bull Thesis Anyway and Choose COIW After looking at the scenarios, it should be clear that unless a call writing strategy is efficient and active, or the underlying optimally volatile (unlike in the case of Coinbase, where volatility is almost too high), it is better to rely on the underlying's bull thesis than on the option mechanics to generate income irrespective of the underlying moves. If there is a bull thesis, then a moderately leveraged income plan works out better - the performance differential is material in flat and rallying conditions. On the other hand, the leveraged plan surely underperforms the option plan on drawdowns, but the margins are thinner compared to the other two scenarios. For a bullish Coinbase thesis, I would conclude the following. I would recommend a Buy for the direct Coinbase stock and encourage a DIY style payout over time. This avoids the pitfalls of leverage and balances the risk reward best. Since, I am actually Hold to cautious Buy on Coinbase in the medium term, conscious of valuations and volatility, I would recommend a Hold on COIW - it carries its risks although it balances them well with rewards on rallies. The Hold rating looks reasonable particularly because I am not bearish on Coinbase. The rating that needs correction in the light of this thesis on COIN and COIW, is CONY's. I have rated it Hold thus far because of tactical use cases in drawdowns. But that use case also yields hardly a few percentage points at best. I think, to align ratings meaningfully, I will need to downgrade CONY from a Hold to Sell. COIW is a Hold and a better bet given its risk reward profile and a mildly bullish underlying thesis. CONY's performance neither captures upside, nor adds meaningful drawdown benefits. It even stutters in flat markets. COIW's Performance and Yields versus CONY Although I would expect COIW's leverage to show up at around ~15% due to compounding, actual performance shows COIW tracing COIN through both bullish and bearish market conditions. That implies the leverage is being actively managed, most likely no leverage most of the times. That gives me greater confidence in COIW by removing the constant 20% leverage overhang and risks thereof, although COIW retains the ability to employ the full 20% leverage in conducive markets. Data by YCharts The other thing I like about COIW is its more conservative yield compared to CONY. COIW has paid out ~$18 in 32 weeks. That translates to an annualized yield of ~$29.5 i.e. ~63%. This is still aggressive and comes with NAV erosion concerns too, but is much lesser than the CONY's $10.25 payout in the past year, that translates to a yield of 133% of current prices. COIW does stand a chance of maintaining its NAV in bullish conditions in comparison to CONY, whose NAV erosion appears to be irrespective of market conditions because of the very high yields. It also helps that despite the leverage, COIW's expense ratio is 0.99%, compared to CONY's 1.22%. This may, of course, increase in the future as COIW starts employing higher leverage compared to today's levels. All in all, COIW outdoes CONY in most market conditions. Its active leverage management means the downside is not drastically worse than CONY's. I would recommend COIW to any investor who has a bullish thesis on COIN. I will keep it a Hold because its leverage risks and also because COIN has a few pressures on its otherwise bullish thesis - i.e. valuations and volatility. But in most market conditions, it has better credentials than CONY, which I downgrade to a Sell.
