YieldMax Dropped a Bombshell: Reverse Splits = Diaster?

YieldMax just announced reverse splits across 12 ETFs. Here’s what’s happening, how it affects my portfolio, and why I’m not panicking.

ULTY & TSLY Reverse Split Explained — And What It Means for Income Investors Like Us

Recently, YieldMax dropped a major announcement: a series of reverse splits across 12 of their high-yield, single-stock covered call ETFs.

If you’re holding ULTY, TSLY, or any of the YieldMax funds for income — especially if you’re using them as part of a margin-supported income strategy like I do — this is important to understand.

Today’s post breaks down:

• What a reverse split actually is

• Why YieldMax is doing this

• How my ULTY and TSLY positions will change

• Whether income will be affected

• My updated thoughts as a Singapore dividend investor using margin responsibly

---

What YieldMax Just Announced

YieldMax and Tidal have officially filed to implement reverse splits on the following ETFs.

🔟 One-for-Ten (1:10) Reverse Splits

Every 10 old shares become 1 new share.

• ULTY — Ultra Option Income Strategy ETF

• CRSH — Short TSLA Option Income ETF

• DIPS — Short NVDA Option Income ETF

• FIAT — Short COIN Option Income ETF

• MRNY — MRNA Option Income ETF

• AIYY — AI Option Income ETF

• CONY — COIN Option Income ETF

🖐 One-for-Five (1:5) Reverse Splits

Every 5 old shares become 1 new share.

• YBIT — Bitcoin Option Income ETF

• TSLY — Tesla Option Income ETF

• XYZY — XYZ Option Income ETF

• ABNY — ABNB Option Income ETF

• OARK — Innovation Option Income ETF

Are reverse splits good or bad?

Do you need to do anything?

No.
Reverse splits happen automatically inside your brokerage account.

You’ll simply wake up to:

• Fewer shares

• A higher share price

• The same total value

Nothing gets bought or sold manually.

---

Why YieldMax Is Doing This (And Why It’s Not a Dividend Cut)

When ETF prices fall too low — usually near the $3 threshold — several problems happen:

• Liquidity drops

• Volatility spikes

• Brokers may increase margin maintenance to 100%

• Some platforms stop showing the ETF in screeners

• Funds risk delisting or structural constraints

A reverse split resets the price back to a healthier level.

It does not:

• Fix NAV erosion

• Change the ETF’s investment strategy

• Cut (or increase) dividends

• Alter long-term performance

It’s simply a mathematical restructuring, not a fundamental change in the fund.

Think of it like upgrading the size of the chips in a vending machine:
same total chips, just fewer bigger packets.

---

How This Impacts My Portfolio

📌 My ULTY Position

• 3,000 shares at $6 average cost

• After 1:10 split → 300 shares

• New cost basis → $60 per share

• Total cost basis stays the same: $18,000

📌 My TSLY Position

• 333 shares at $7.70 average cost

• After 1:5 split → ~66 shares

• New cost basis → $38.50 per share

• Total cost basis remains unchanged

📌 What about income?

Reverse splits do NOT reduce total income.

If ULTY used to pay $0.09 per share:

• Pre-split: 3,000 × $0.09 = $270

• Post-split: 300 × $0.90 = $270

Same total distribution.
Just a cleaner price structure.

---

Does This Affect Margin?

Yes — but in a good way.

If ULTY or TSLY kept drifting lower, brokers could easily reclassify them as:

“Low-priced, high-volatility securities”

…which often raises maintenance margin to 100% or 100% cash-only.

That means:

• Forced liquidations become more likely

• You lose the ability to withdraw

• Your portfolio’s safety buffer shrinks

By resetting the price higher, the fund remains within healthy margin classification.

As someone who uses margin responsibly —
my margin loan is only USD $7.8K against a USD $137K portfolio —
this helps keep my strategy stable.

---

My Strategy Moving Forward

I still believe in my income flywheel:

• Deposit

• Invest

• Collect weekly distributions

• Pay down margin

• Repeat

This reverse split does not change that.

My updated plan:

• Continue holding ULTY and TSLY

• Position sizes remain controlled (10–20% max exposure)

• Keep monitoring NAV behaviour after the reset

• Track whether post-split distributions remain stable

Reverse splits are not a bullish sign — they’re simply a structural reset, not an indication of the fund’s health improving.

But for income investors, especially margin-supported income investors, they are not automatically bad either.

Stay calm and assess your situation. Don’t panic about reverse splits.

---

Final Thoughts

Reverse splits sound scary.
I get it — most people associate them with dying stocks.

But for YieldMax’s structure, especially for weekly-paying income ETFs, it’s just housekeeping. A way to keep everything functioning inside the system.

Your total value doesn’t change.
Your income doesn’t disappear.
Your strategy does not suddenly break.

And if you’re diversified and using margin safely, these changes are manageable.

If you’re holding any YieldMax ETF from the list above, everything will update automatically. No action is required on your part.

Disclaimer:

This content is for education and personal sharing only. Nothing in this post is financial advice, investment advice, or a recommendation to buy or sell any security. I am not a licensed financial adviser. All investing involves risk, including the potential loss of capital. Please do your own research or consult a qualified financial professional before making any financial decisions. My portfolio, strategies, and results may not be suitable for your situation.