Recap of the Most Interesting Recent ETF Filings For the NYSE

YieldMax ETFs

YieldMax made ETF history in 2022 with their launch of numerous single-stock, yield-focused ETFs such as the YieldMax TSLA Option Income Strategy ETF (TSLY), along with similar offerings for Apple, Nvidia, and Amazon. Each of these ETFs utilized an options writing strategy to target double-digit annual yields.

None of these ETFs invest directly in the underlying stock, and are thus not entitled to dividends. Instead, the ETFs establish a synthetic position via FLexible EXchange (“FLEX”) call and put option contracts, which have customizable terms. 

The overall strategy used is called a "synthetic covered call", where instead of holding 100 shares of the underlying security the calls are sold on, the ETF established a synthetic long position via derivatives. This involves simultaneously buying call options and selling put options.

The end result of this trade is a position designed to equal 100% long exposure to the reference stock. Then, the ETF can sell call options expiring in one month or less with a strike price 5-15% out of the money. This is essentially the "poor man's covered call strategy" wrapped in an ETF. 

In May, YieldMax filed a prospectus to launch 10 more single-share ETFs, which track the following stocks: MicroStrategy, Alibaba, Airbnb, AMD, Moderna, Paypal, Disney, JPMorgan Chase, Microsoft, and Exxon Mobil: 

• YieldMax MSTR Option Income Strategy ETF (MSTY)
• YieldMax BABA Option Income Strategy ETF (BABO)
• YieldMax ABNB Option Income Strategy ETF (ABNY)
• YieldMax AMD Option Income Strategy ETF (AMDY)
• YieldMax MRNA Option Income Strategy ETF (MRNY)
• YieldMax PYPL Option Income Strategy ETF (PYPY)
• YieldMax DIS Option Income Strategy ETF (DISO)
• YieldMax JPM Option Income Strategy ETF (JPMO)
• YieldMax MSFT Option Income Strategy ETF (MSFO)
• YieldMax XOM Option Income Strategy ETF (XOMO)

USCF ETF Trust

Commodity ETFs experienced increased attention and inflows throughout 2021 and 2022 due to investors seeking a safe haven from inflation. However, numerous providers also took it upon themselves to provide exposure to lesser-known commodities, such as copper and uranium. 

Another upcoming ETF that eschews the usual focus on gold and silver to focus more on base metals is the pending USCF Aluminum Strategy Fund (ALUM). ALUM will be actively managed by tracking a portfolio of aluminum futures, but can also buy options, forwards, and options on futures. 

As with most commodity futures ETFs, the majority of ALUM's holdings will be in money market instruments or Treasury bills for collateral. The usual risks with contango and leverage risk apply. Once again, ALUM will be actively managed, so it will not track a benchmark index. 

First Trust

First Trust filed a prospectus for the First Trust S&P 500 Diversified Free Cash Flow ETF (FCFY), which will track the S&P 500 Sector-Neutral FCF Index. This index is owned and developed by S&P Dow Jones Indices and is intended to track the S&P 500 companies that have the top 20% highest free cash flow yield among their peers within each sector. 

The index sector weights will mirror the S&P 500, and each individual holding will be constrained between 0.25% - 5.00%. The launch of FCFY looks like an attempt to capitalize on the success and popularity of the similar Pacer US Cash Cows 100 ETF (COWZ), which also screens for free cash flow, albeit with a different index benchmark.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.