TLT - SVOL: Looks Interesting Because Of The VIX Curve And Upcoming Elections

2024-05-23 09:51:19 ET

Summary

• Simplify Volatility Premium ETF generates income by selling VIX futures and investing in income-producing securities like high-yield and government bonds.
• The SVOL ETF also buys out-of-the-money VIX calls to hedge against tail risks and cap potential losses.
• Despite the low current VIX levels, the strategy may still be effective depending on the forward VIX futures curve and potential future events.

The Simplify Volatility Premium ETF ( SVOL ) sells volatility (through S&P VIX Index (VIX) futures) to generate an attractive income relative to what other income producing asset classes generate. The majority of the assets are actually invested in income producing securities like high-yield bonds and government bonds. This strategy of selling VIX futures generates a very high-income relative to the amount required to sell....

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