PLUS Tesla Weekly Covered Call Bond Mix ETF Newly Listed

A Bond-Mixed ETF Investing
30% in Tesla and 70% in 3-Year Government Bonds

Hanwha Asset Management announced on December 10 that it has newly listed the 'PLUS Tesla Weekly Covered Call Bond Mix' Exchange Traded Fund (ETF).

The PLUS Tesla Weekly Covered Call Bond Mix ETF invests 30% in Tesla and 70% in 3-year government bonds. This is a bond-mixed covered call ETF that pays distributions by utilizing a covered call strategy. It sells weekly call options at a fixed rate of 50% and pays monthly distributions with the 15th of each month as the record date.

The proportion of call options sold is limited to half of the held stocks, allowing participation in Tesla's stock price increases with the remaining half. Generally, selling call options provides the 'option premium' that serves as the source for distributions, but it also caps upside gains. By adjusting the selling proportion, the ETF is designed to also participate in upward movements. According to internal backtesting, when Tesla's stock price rises, the probability of weekly returns exceeding 3% is approximately 74%.

Despite lowering the proportion of option sales, the ETF can still generate a relatively high level of distribution resources due to the underlying asset's volatility and the characteristics of weekly options. By utilizing short-term weekly options, premiums can be collected more frequently compared to monthly options. Since Tesla's stock price is highly volatile, a relatively small selling proportion can still secure a high level of premium. Generally, the greater the volatility of the underlying asset, the higher the option premium. The PLUS Tesla Weekly Covered Call Bond Mix ETF targets an average annual distribution rate of around 24%.

By allocating 70% to 3-year government bonds, the ETF can partially hedge against Tesla's high downside volatility. The ETF is classified as a 'safe asset' under retirement pension regulations, allowing 100% allocation in retirement pension (DC/IRP) and individual pension accounts without investment limits. It is suitable for investors who want exposure to Tesla but are concerned about the high volatility of individual stocks, or those seeking to maximize distributions by leveraging Tesla's volatility within pension accounts.

Kim Jeongseop, Head of ETF Business Division at Hanwha Asset Management, emphasized, "In the robotics sector, which has emerged as the new battleground in the US-China power struggle, Tesla is undoubtedly the leading American company."

He added, "When investing in 'single stock covered call' ETFs based on high-growth stocks like Tesla, it is essential to adopt a strategy that secures distributions effectively without missing out on gains during bull markets." He further stated, "The PLUS Tesla Weekly Covered Call Bond Mix ETF is a product that allows investors to benefit from Tesla's upward momentum while maximizing the cash flow of pension assets with monthly distributions at an annual rate of 24%."

This content was produced with the assistance of AI translation services.