EXCLUSIVE: Thrill Ride With A Dividend? New ETF Marries MicroStrategy Leverage With Income

In a leveraged gamble-driven ETF space, Defiance ETFs is walking a line that few knew was there.

The firm’s newest product, the Defiance Leveraged Long + Income MSTR ETF MST, combines heightened exposure to MicroStrategy MSTR shares with weekly income dividends. The result is a high-power instrument designed for risk-conscious investors looking for momentum plus cash flow.

Sylvia Jablonski, CEO of Defiance ETFs, spoke to Benzinga about the high-stakes logic behind her firm's latest creation — the MST fund.

“MST was born from two key observations: first, retail traders are drawn to leverage for its potential to enhance short term performance directionally; second, many also want income and cash flow. By merging these features, MST offers a differentiated product that's designed to deliver what investors have been asking for,” said Jablonski.

The fund aims 1.5x to 2x MicroStrategy’s intraday price action and employs a credit call spread strategy to pursue steady options income. It’s the first ETF of its kind to try this blend, really synergizing a volatility hound trader with an income-seeker requiring regular payments. But like anything trying to corral a beast like MicroStrategy, whose 4,000% rally since late 2022 tracks the ebbs and flows of Bitcoin, the fund is not without its risks.

"The credit call spread strategy looks to generate consistent income, and capture upside performance. When MSTR pulls back, premiums tend to rise—ironically giving us more income cushion," said Jablonski. "The options income doesn't eliminate risk, but it helps absorb some drawdown and smooth returns during turbulent weeks," she added.

Although drawdowns in a leveraged product cannot be fully eliminated, weekly income provides a counterbalance, explained Jablonski. “It gives investors a potential return stream even in flat or mildly negative weeks.”

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Not Just For The Daredevils

Though MST's mechanics suggest it's made for aggressive traders, its utility covers a broader spectrum of tactical use cases.

"MST is for the tactical, risk-aware investor who wants both excitement and a steady payout. It's not for someone seeking capital preservation," Jablonski clarified. "But for those who understand volatility and want to express a high-conviction view with income potential, it can be a smart tool."

And while MST is clearly more geared toward swing trades and short-term conviction plays, the weekly income twist may encourage longer holding periods compared to traditional leveraged funds.

"Like all levered ETFs, MST's returns compound daily. That's a feature, not a bug — but it means investors should think in terms of short-to-medium-term tactical use," she noted. "The addition of weekly income, though, makes the return profile more dynamic than traditional 2x funds. Think of MST as a high-octane strategy with a built-in cash flow element."

Leveraged ETFs are generally tactical, but the weekly income component encourages longer holding periods, according to Jablonski.

The MicroStrategy Strategy

Despite the crowded field of Bitcoin-adjacent names, Jablonski is unwavering in her choice of MicroStrategy as the ETF's core.

"MSTR has the highest Bitcoin sensitivity and volatility profile, which is exactly what traders want for leverage and options overlays. MicroStrategy is still the cleanest BTC bet on the equity side."

And for investors wanting exposure to Bitcoin without owning the asset outright, MST is, in Jablonski's words, "a bit of both."

"MSTR is the purest Bitcoin equity proxy available, with a CEO who's essentially doubling down on BTC every chance he gets. Investors know they're not buying a software firm, they're getting Bitcoin beta through a publicly traded stock."

‘Crypto Is Quietly Consolidating’

While artificial intelligence and semiconductor narratives have dominated headlines in 2024, Jablonski sees the crypto story mounting a comeback.

"Absolutely. We believe Bitcoin's next leg higher is coming—and MicroStrategy is positioned to benefit disproportionately. While AI and semis dominate the headlines, crypto is quietly consolidating strength. We saw the same setup in 2020. It's about to reemerge."

Retail traders, particularly those on self-directed platforms, are already showing interest in products like MST, Jablonski noted.

MST is far from a passive investment, it's an active bet on Bitcoin via MicroStrategy. It’s turbocharged with leverage and somewhat buffered by weekly income. For the tactical investor who understands the stakes, it's a fresh take on an old trade. The added twist, Jablonski says, is a "thrill-seeker's dividend."

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