- Global X ETFs announced in a press release the launch of six ETFs designed to help investors looking for options-based strategies in a period of low-yield increased volatility.
The COVID-19 pandemic has created a perpetually low-rate environment with marked periods of volatility. The funds offer investors ways to produce income in a generally low-yield market, and protect against unexpected volatility and downside risks.
“By expanding our offering of options-based strategies, we’re able to continue to bring timely solutions that seek to generate additional income or manage market risk,” said Rohan Reddy, research analyst at Global X ETFs in the release. “Through this latest launch, we’re thrilled to add tail risk, risk managed income and collar strategies to our existing lineup of covered call ETFs to help investors navigate the current market landscape.”
The funds are a mixture of call and put options that are applied to the S&P 500 or the Nasdaq 100 in a variety of ways, and all carry an expense ratio of 0.60%.
Protective Put Funds
The Global X S&P 500 Tail Risk ETF (XTR) seeks to offer passive investment results that correspond to the underlying index, the Cboe S&P 500 Tail Risk Index. This index measures the performance of a protective put strategy that is applied to the underlying stocks of the S&P 500 Index.
The Global X Nasdaq 100 Tail Risk ETF (QTR) seeks to offer passive investment results that correspond to the underlying index, the Nasdaq-100 Quarterly Protective Put 90 Index. This index measures the performance of a protective put strategy that is applied to the underlying stocks of the Nasdaq 100 Index.
In these particular cases the funds utilize long put options, placing a 10% long position out-of-the-money put option on the securities in the S&P 500 Index or the Nasdaq 100 Index respectively.
The underlying index takes long positions on a quarterly basis with quarterly put options that have an exercise price close to 10% below the current market price of the parent index.
Net Credit Collar Strategy
The Global X S&P 500 Risk Managed Income ETF (XRMI) seeks to offer passive investment results that correspond to the underlying index, the Cboe S&P 500 Risk Managed Income Index. This index measures the performance of an options collar strategy that is applied to the S&P 500 Index, using a mix of short (sold) call options and long (purchased) put options.
The Global X Nasdaq 100 Risk Managed Income ETF (QRMI) seeks to offer passive investment results that correspond to the underlying index, the Nasdaq-100 Monthly Net Credit Collar 95-100 Index. This index measures the performance of an options collar strategy that is applied to the Nasdaq 100 Index, using a mix of short (sold) call options and long (purchased) put options.
The fund uses a 5% long position on out-of-money put options and a short position in at-the-money call options on the securities in the parent index.
The underlying index takes long positions on a monthly basis with monthly put options that have an exercise price close to 5% below the current market price of the parent index and monthly call options with an exercise price at the current market prices of the parent index.
Asymmetric Collar Strategy
The Global X S&P 500 Collar 95-110 ETF (XCLR) seeks to offer passive investment results that correspond to the underlying index, the Cboe S&P 500 3-Month Collar 95-110 Index. This index measures the performance of an options collar strategy that is applied to the S&P 500 Index, using a mix of short (sold) call options and long (purchased) put options.
The Global X Nasdaq 100 Collar 95-110 ETF (QCLR) seeks to offer passive investment results that correspond to the underlying index, the Nasdaq-100 Quarterly Collar 95-110 Index. This index measures the performance of an options collar strategy that is applied to the Nasdaq 100 Index, using a mix of short (sold) call options and long (purchased) put options.
The funds use a 5% long position in out-of-the-money put options and a short position in 10% out-of-the-money call options that all correspond to the value of the stocks in the parent index.
The underlying index takes long positions on a quarterly basis with quarterly put options that are 5% below the current market price of the parent index, while also taking short positions with quarterly call options that have an exercise price that is 10% above the current market price of the parent index.
