Credit Suisse, the underwriting bank for a suite of X-Links exchange traded notes, has expanded its line of covered-call offerings with a crude oil-related option.
The bank has rolled out the Credit Suisse X-Links Crude Oil Shares Covered Call ETN (NasdaqGM: USOI). USOI comes with a 0.85% expense ratio.
USOI tries to reflect the performance of the Credit Suisse Nasdaq WTI Crude Oil FLOWS 106 Index, which tracks the return of a “covered call” strategy on the shares of United States Oil Fund (NYSEArca: USO) by reflecting the price changes of the shares and the option premiums received from the sale of monthly call options on USO shares.
Covered-call, or buywrite, options allow an investor to hold a long position in an asset while simultaneously writing, or selling, call options on the same asset. Traders would typically employ a covered-call strategy when they have a neutral view of the markets over the short-term and just gather income from the option premium. While these buy-write ETFs may not produce any phenomenal price returns compared to the broader equities markets, their underlying option strategy helped them generate outsized yields.