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Seems foolish to me: https://realmoney.thestreet.com/investing/ets/tsly-tk-16109970 These are highly volatile strategies so you have to be a smart trader or speculator to play them correctly, not a long-term investor. But also I believe the fees are 1%, very high for ETFs. Finally, if investors are sophisticated enough to trade these well, they could also design an options strategy that mimics them without paying the fees.
In fact, because of regulatory restrictions on ETFs with single security exposure like Tesla, these ETFs are actually overly complex covered call strategies. One could easily buy Tesla and write a call option on it for the income without paying these fees. Instead this TSLY creates a synthetic ownership of Tesla stock by writing put options to skirt the concentration rules in ETFs. That is not necessary if you do this yourself.
I don't get fascination in yield for its own sake. Why would one pay (in the form of negative total return) just to get some of one's own money back as divs?
A very quick glance at OARK suggests it is using a strategy similar to principal protected (structured) notes, but with additional risks.
It clearly isn't achieving its stated goal of providing long exposure to ARKK via derivatives while generating income with covered calls. ARKK is up about 11% Nov 25 - Apr 3 (36.00 to 39.58, price movement). OARK not only failed to capture any part of this gain, it lost money even after generating income with "covered" calls and Treasuries.
Even YTD, OARK is up 4.57% (total return). ARKK (price) is up over 25%. (OARK's gains are capped; how much of the shortfall is explained by this cap, and how much by its strategy and/or poor execution?)
Gut feeling is that its failure to meet objectives is due in part to daily pricing as opposed to point-to-point pricing generally used by structured notes coupled with a volatile underlying security. But that's really just a superficial reaction.
This video linked below explains the strategy. I am underwhelmed as I think it is high risk, high fee and you’re capping your upside with the options while still taking those risks. If I wanted to take so much risk, I would just buy Tesla or ARKK directly.
Comments
These are highly volatile strategies so you have to be a smart trader or speculator to play them correctly, not a long-term investor. But also I believe the fees are 1%, very high for ETFs. Finally, if investors are sophisticated enough to trade these well, they could also design an options strategy that mimics them without paying the fees.
In fact, because of regulatory restrictions on ETFs with single security exposure like Tesla, these ETFs are actually overly complex covered call strategies. One could easily buy Tesla and write a call option on it for the income without paying these fees. Instead this TSLY creates a synthetic ownership of Tesla stock by writing put options to skirt the concentration rules in ETFs. That is not necessary if you do this yourself.
Lifetime total return of TSLY (using Yahoo's adjusted NAV figures) -1.6%
Nov 23 - Apr 3, 16.45/16.72 - 1 = -0.0161 = -1.6%
https://finance.yahoo.com/quote/TSLY/history?p=TSLY
Lifetime total return of OARK (using Yahoo's adjusted NAV figures) -5.1%
Nov 25 - Apr 3, 14.46 / 17.35 - 1 = -0.0513 = -5.1%
https://finance.yahoo.com/quote/OARK/history?p=OARK
A very quick glance at OARK suggests it is using a strategy similar to principal protected (structured) notes, but with additional risks.
It clearly isn't achieving its stated goal of providing long exposure to ARKK via derivatives while generating income with covered calls. ARKK is up about 11% Nov 25 - Apr 3 (36.00 to 39.58, price movement). OARK not only failed to capture any part of this gain, it lost money even after generating income with "covered" calls and Treasuries.
Even YTD, OARK is up 4.57% (total return). ARKK (price) is up over 25%. (OARK's gains are capped; how much of the shortfall is explained by this cap, and how much by its strategy and/or poor execution?)
Gut feeling is that its failure to meet objectives is due in part to daily pricing as opposed to point-to-point pricing generally used by structured notes coupled with a volatile underlying security. But that's really just a superficial reaction.
Note: the subject line has a typo: TSLY, not TSLS
https://m.youtube.com/watch?v=zhscCL-L8ykMight as well trade weekly Tsla csp, Likely more premiums incomes if do Delta 14 12