Leverage Shares, a specialist manager of single stock ETPs with over USD1 billion in assets under management, has launched a new product line for traders called IncomeShares.
Leverage Shares now offers the first options-based ETPs in the EU and UK tracking individual securities, providing investors with the opportunity to generate high income and potentially mitigate downside risk.
Options strategies can play an important role in a portfolio, offering a diversified source of income.
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While covered call strategies once required investors to trade options on their own, covered call ETPs allow investors to incorporate these strategies conveniently into their portfolios.
The initial rollout of IncomeShares will feature three products:
- IncomeShares NVIDIA (NVDA) Options ETP: Designed to track the performance of NVIDIA Corporation (NVDA) while generating income through covered call options.
- IncomeShares Tesla (TSLA) Options ETP: Tracks the performance of Tesla, Inc. (TSLA) while offering income generation through covered call options.
- IncomeShares Gold+ Yield ETP: Provides exposure to gold and aims to generate additional income through covered call options.
The lineup features exposure to Tesla NASDAQ:TSLA and Nvidia NASDAQ:NVDA, the two most traded stocks globally, and gold, whose popularity has surged this year amid global macroeconomic and geopolitical uncertainty.
Unlike other issuers using synthetic replication, IncomeShares ETPs directly purchase the underlying securities tracked. Weekly call options are then written (sold) with strike prices 3-5% out-of-the-money, distributing the premiums to investors monthly. The strategies aim to maximize income from the premiums collected, while also partially participating in the upside of the securities tracked.
Commenting on the launch, Oktay Kavrak, Director of Strategy and Communications at Leverage Shares said, “Structured products are a European specialty, yet the US has overtaken us in the widespread adoption of such strategies. And the ETF wrapper played a crucial role in this shift. We want to bring that same access to options strategies for investors across Europe and the UK.”
Stock specific options investing
While existing options-based ETPs are available from other issuers in the EU and UK, they typically track broad indices. IncomeShares ETPs are the first to offer such strategies on individual securities — with more launches planned in the coming months.
The success of options-based ETFs in the US highlights the potential for IncomeShares in the EU and UK. With US-listed option-based ETFs growing over 600% to ~$115 billion in AUM over the past three years Leverage Shares believes IncomeShares will meet the rising demand for income-generating strategies among EU & UK investors.
“In today’s environment with record high market concentration and investors growing worried about stretched valuations, IncomeShares offer a compelling option. Investors can still participate in some upside potential while mitigating some of the downside risk.”
