Elevate rolls out income-enhanced single stock ETFs

Aug 1st, 2023 | By | Category: Equities

Elevate Shares has expanded its ‘YieldMax’ line-up in the US with the introduction of several ETFs delivering income-enhanced exposure to prominent technology-enabled companies.

Elevate rolls out income-enhanced single stock ETFs

Covered call strategies seek to deliver income that is uncorrelated with traditional sources of yield.

Following a flurry of recent listings on NYSE Arca, Elevate Shares now offers six YieldMax single stock ETFs based on Apple, Alphabet, Nvidia, Amazon, Tesla, and Meta.

Each fund is actively managed and sub-advised by ZEGA Financial, an SEC-registered investment adviser and manager specializing in derivatives-based investing.

Each ETF enacts a synthetic covered call strategy on their underlying target stock. A covered call is an options strategy whereby an investor holds a long position in an asset and sells or “writes” call options on that same asset in an attempt to generate more income (the additional income from the option’s premium) than the asset would otherwise provide on its own from dividends or other distributions.

Historically, during bear markets, range-bound markets, and modest bull markets, covered call strategies have generally outperformed their underlying securities. However, during strong bull markets, when the underlying securities may frequently rise through their strike prices, covered call strategies historically have tended to lag.

While covered call strategies do limit upside participation, they can generate steady income during turbulent periods and diversify an investor’s sources of yield away from equities and bonds which historically have struggled during rising rate environments.

In terms of the new ETFs, Zega utilizes a mix of long call and long put options on the underlying stocks to approximate a 100% long exposure to the target company. The firm then opportunistically sells one-month call options on the underlying stock with strike prices between 5% and 15% above that stock’s current share price.

Each of the new ETFs, listed below, comes with an expense ratio of 0.99%.

YieldMax AAPL Option Income Strategy ETF (APLY US)
YieldMax GOOGL Option Income Strategy ETF (GOOY US)
YieldMax NVDA Option Income Strategy ETF (NVDY US)
YieldMax AMZN Option Income Strategy ETF (AMZY US)
YieldMax TSLA Option Income Strategy ETF (TSLY US)
YieldMax META Option Income Strategy ETF (FBY US)

At the beginning of the year, Elevate Shares launched the YieldMax Innovation Option Income Strategy ETF (OARK US) which delivers income-enhanced exposure to Ark Invest’s flagship disruptive technology fund, the $8.0 billion ARK Innovation ETF (ARKK US).

The firm has also filed to launch an additional four YieldMax ETFs which will deploy synthetic covered call strategies on the $6.1bn KraneShares CSI China Internet ETF (KWEB US), $12.3bn VanEck Gold Miners ETF (GDX US), $6.4bn SPDR S&P Biotech ETF (XBI US), and $43.2bn iShares 20+Year Treasury Bond ETF (TLT US).

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