Harnessing daily options for income without giving up the Nasdaq-100.
Potential for enhanced income
The systematic sale of very short-dated call options, typically with one day to expiry, positions the strategy to aim to capture any option premiums on a repeated and consistent basis.
Seeking greater upside participation than traditional covered calls
More frequently expiring options with adaptive, further out-of-the-money strike setting result in the strategy forgoing less of the Nasdaq-100 index’s potential upside as call options are exercised.
Adaptive, rules-based approach aimed at reducing timing risk
The strike price of the call options is set adaptively in line with implied volatility, while daily resets aim to reduce the risk of being locked into a longer-dated call ahead of a Nasdaq-100 index rally. This may reduce some of the timing constraints associated with monthly and quarterly strategies.
Selling very short-dated index call options, such as with one day until expiry, may generate option premiums frequently and provide the potential for a regular income stream.
Upside potential
Using options that expire more frequently may allow investors to retain more of an underlying index’s growth potential than traditional covered call strategies.
Adaptive approach may reduce timing risk
Strike prices can be adjusted according to expected market volatility, while daily resets reduce the risk of being tied to a longer-term option position before a market rally. This may offer greater flexibility and may reduce timing risk compared with monthly or quarterly covered call strategies.
The Nasdaq 100 Daily Covered Call ETF tracks the Nasdaq-100 Daily Covered Call Index (NDXDCC). The index tracks the performance of a systematic covered call strategy which aims to generate income through periodic selling of upside participation using Nasdaq-100® (NDX) Index call options, typically with 1 day to expiration.
HAN Nasdaq 100 Daily Covered Call UCITS ETF (QQQI) is Europe’s first covered call ETF with daily option expiries. The Nasdaq-100 Daily Covered Call ETF seeks to generate income through the systematic sale of short-term index options on the Nasdaq-100, while aiming to retain more of the index’s potential upside than traditional monthly strategies. Covered call strategies are not a new concept in European markets. Daily expiries are. QQQI may offer income-focused investors the potential for regular distributions by seeking to capture the volatility risk premium through an options-based strategy.
Key Risks
While the Fund may use a covered call option strategy which is intended to provide income, there is no guarantee that the derivative strategy will achieve this. The Fund may forego some income generation potential, while retaining the risk of loss should the price of the underlying securities decline. Selling index call options will create exposure for the Fund, as it may have to deliver the underlying securities or their value and, should the market move unfavourably, this may result in an unlimited loss. The maximum loss for the seller of an index call option is potentially unlimited if the option seller does not hold the underlying securities which underlies the options. The ETF may become concentrated in particular markets or holdings, increasing volatility, potential losses and the risk of reduced distributions, and is not required to hedge its exposure. The ETF may invest in securities that differ from the Index and use derivatives to meet its objective, which may involve greater or different risks than traditional investments. For a complete overview of all the risks, please refer to the “Risk Factors” in the Prospectus.
Source: HANetf, data as of . Please note that all performance figures are showing net data. Performance before inception is based on back-tested data. Back-testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled “Risk Factors” for further details of risks associated with an investment in this product. If fund is less than 12 months old, YTD field will be calculated since inception. When you invest in ETFs your capital is at risk.
No. of holdings: 101
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