ProShares Short S&P500 (SH) Covered Calls

The ProShares Short S&P 500 (SH) is a leveraged exchange-traded fund that seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the S&P 500 Index. It is designed as a tactical tool for investors to hedge their equity portfolios or to profit from short-term market declines.

You can sell covered calls on ProShares Short S&P500 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 SH (prices last updated Mon 4:16 PM ET):

Want to make money with covered calls?  Sign Up For A Free Trial

Core Business and Products

The ProShares Short S&P 500 (SH) provides a simple, inverse exposure to the performance of the U.S. large-cap equity market. By aiming for a -1x daily return, the fund effectively acts as a "short" position on the S&P 500 without the complexities of margin accounts, short-selling borrows, or the unlimited risk profile associated with traditional shorting.

The fund is structured as a passive, derivatives-based ETF. It utilizes financial instruments such as swaps and futures contracts to replicate the inverse performance of the index. Because the fund resets its leverage daily, its performance over periods longer than a single day is subject to the effects of compounding, which can lead to tracking differences in trending or highly volatile markets.

Competitive Landscape

SH is a primary instrument in the inverse ETF space, competing with other short-exposure products like the ProShares Short QQQ (which tracks the Nasdaq-100) or various leveraged bear funds that seek -2x or -3x exposure. SH is often preferred for its -1x factor, as it introduces less volatility and decay than its leveraged "UltraShort" counterparts.

As a highly liquid and optionable security on U.S. exchanges, SH is a go-to tool for institutional hedging. Many investors write covered calls against their SH holdings or purchase puts to create cost-effective "bearish" spreads, using the fund as a proxy to manage market risk during periods of anticipated turbulence.

Strategic Outlook and Innovation

The strategic outlook for SH is dictated by investor sentiment regarding the U.S. equity market. It is an evergreen hedging tool that sees increased volume during market corrections or periods of economic uncertainty. While it is not intended for long-term "buy-and-hold" investors, it remains a critical component for active risk management.

Innovation in this segment focuses on the efficiency of swap execution and the mitigation of tracking error relative to the S&P 500. SH provides a disciplined, transparent way for market participants to express a negative view on the broad U.S. market, facilitating sophisticated portfolio strategies that were previously inaccessible to most retail investors.

Want more examples? SGU Covered Calls | SHAK Covered Calls