ProShares UltraShort Nasdaq Biotechnology (BIS) Covered Calls

The ProShares UltraShort Nasdaq Biotechnology ETF is a leveraged inverse exchange-traded fund that targets twice the inverse (-2x) of the daily performance of the Nasdaq Biotechnology Index. It utilizes derivative instruments, such as swap agreements and futures, to achieve its magnified daily results. The fund is a tactical, short-term trading tool for sophisticated investors seeking to profit from or hedge against declines in the biotechnology and pharmaceutical sectors.

You can sell covered calls on ProShares UltraShort Nasdaq Biotechnology to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for BIS (prices last updated Wed 4:16 PM ET):

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The ProShares UltraShort Nasdaq Biotechnology (BIS) is a geared exchange-traded fund that seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Nasdaq Biotechnology Index. This index includes companies listed on the Nasdaq that are classified as biotechnology or pharmaceutical according to the Industry Classification Benchmark. As a leveraged inverse product, BIS is designed for sophisticated investors who monitor their holdings daily and understand the mathematical effects of compounding and volatility decay on geared returns.

Core Business and Products

BIS does not invest directly in the equity of biotechnology companies. Instead, it achieves its -2x objective through a variety of financial derivatives, primarily total return swap agreements with major global financial institutions and futures contracts. The fund also maintains a significant portion of its assets in cash and money market instruments to serve as collateral for these derivative positions. Because the fund resets its exposure daily, it is intended as a short-term tactical tool. Over periods longer than a single day, the fund's performance may differ significantly from the -2x multiple of the cumulative index return due to the daily rebalancing process.

Competitive Landscape

BIS operates in a specialized segment of the market, serving as the primary bearish vehicle for the biotechnology sector. It competes with other leveraged and inverse products, as well as traditional long-only biotech ETFs. Key competitors that trade on major exchanges and feature active options markets include:

1. iShares Biotechnology ETF: The primary benchmark for the sector, providing long, unleveraged exposure to the Nasdaq Biotechnology Index.
2. ProShares Ultra Nasdaq Biotechnology: The bullish counterpart to BIS, providing 200% (+2x) of the daily performance of the same index.
3. Direxion Daily S&P Biotech Bear 3X Shares: A more aggressive competitor that seeks three times the inverse (-3x) of a different index, the S&P Biotechnology Select Industry Index.
4. SPDR S&P Biotech ETF: A popular long-only ETF that uses a modified equal-weighting strategy, often used by traders to express a broad bullish view on smaller biotech firms.
5. ARK Genomic Revolution ETF: Competes for tactical healthcare capital by focusing on disruptive genomic technologies, though it is actively managed and long-only.

Traders often use BIS to hedge long biotech portfolios during periods of regulatory uncertainty or following sector-wide valuation peaks.

Strategic Outlook and Innovation

The strategic utility of BIS is tied to the high volatility inherent in the drug development and clinical trial cycle. In 2026, the fund continues to serve as a vital "insurance" mechanism for investors concerned about drug pricing legislation or a slowdown in biotech M&A activity. ProShares manages the fund by optimizing its swap counterparty network to ensure efficient tracking and to minimize the "cost of carry" associated with maintaining leveraged short exposure. As of early 2026, the fund remains one of the most liquid ways to express a concentrated bearish view on the sector.

Innovation at the fund level involves the refinement of daily rebalancing algorithms to mitigate the "slippage" that occurs in highly volatile markets. While the biotech sector is currently buoyed by advancements in AI-driven drug discovery, the risk of technical setbacks or clinical failures remains high. BIS provides a way to capitalize on these downdrafts. Due to the inherent tracking error and decay associated with leveraged products in non-trending markets, the fund's management emphasizes education regarding the "daily reset" mechanism, ensuring that the instrument is used for tactical hedging rather than as a core long-term holding.

Want more examples? BIRK Covered Calls | BITB Covered Calls