REX Shares unveiled an exchange-traded fund on Friday that will try to turn price swings into weekly income for some of the U.S. market’s most volatile stocks, including crypto-focused companies.
The product, dubbed the REX IncomeMax Option Strategy ETF, follows a hedge-fund style strategy to provide cash flow through option premium income, the company said in a statement. To that end, the ETF will have exposure to as many as 30 publicly traded firms, REX added.
The ETF hasn’t made its first distribution yet, but it currently holds $230,000 worth of equity in crypto mining firm Core Scientific, crypto exchange Gemini, and blockchain lender Figure. The latter two firms debuted on Wall Street earlier this year.
Trading under the ticker symbol “ULTI,” REX’s latest ETF “manages a mix of put and call positions” on volatile equities, with “downside mitigation against extreme market swings” by actively buying and selling securities, according to the company’s website.
“ULTI represents a twist on what we’ve done before, in that it’s a very actively managed, high- income generating strategy based on the most volatile names in the market,” Greg King, founder and CEO of REX and Osprey Funds, told Decrypt.
An option premium reflects the price a buyer pays to acquire an options contract, as well as the amount a seller receives for taking on the obligation to buy or sell the underlying asset. By purchasing options contracts, buyers gain amplified exposure to price swings.
The ETF’s composition is expected to shift on a weekly basis, suggesting there may be some periods where the product maintains no exposure to crypto firms. Still, the dynamic shows how REX is creating products tied to the crypto market in multiple ways.
“This has more of an income focus for investors, rather than a particular sector focus, so it is somewhat coincidental,” King said. “I imagine it would stay that way for a while, just because crypto is an emerging field.”
The company, for example, was behind the first ETF offering exposure to XRP in the U.S., which debuted last month. Around the same time, the firm also unveiled an ETF with Osprey Funds that’s linked to Dogecoin, the $28 billion meme coin.
REX’s latest ETF is distinct from Crypto Equity Premium Income ETF, which is modeled on an index of 25 companies in the U.S. that are actively engaged in crypto-related activities. The ETF has made 10 distributions since its inception in January, but they are not guaranteed.