ProShares UltraShort Russell2000 (TWM) Covered Calls

ProShares UltraShort Russell2000 seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Russell 2000 Index. The fund is designed as a tactical tool for investors to profit from declines in U.S. small-cap stocks or to hedge small-cap equity exposure against short-term market pullbacks.

You can sell covered calls on ProShares UltraShort Russell2000 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 TWM (prices last updated Wed 4:16 PM ET):

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Core Business and Products

ProShares UltraShort Russell2000 (TWM) is a leveraged inverse ETF that provides twice the daily opposite return (-200%) of the Russell 2000 Index. As of April 2026, the fund serves as a high-conviction vehicle for traders betting against the small-cap segment of the U.S. equity market. The fund achieves its -2x leverage primarily through swap agreements with major financial institutions and the use of futures contracts. Because it rebalances daily, TWM is intended for short-term tactical use; holding it for longer periods can result in performance that significantly deviates from the -2x target due to compounding and volatility decay.

A major corporate action occurred recently: On February 26, 2026, TWM underwent a 1-for-10 reverse stock split. This action consolidated shares and increased the price per share ten-fold to maintain an optimal trading range for institutional and retail investors. The fund’s underlying index, the Russell 2000, consists of approximately 2,000 small-cap companies, making TWM sensitive to the domestic economic health and credit conditions that typically impact smaller firms.

Competitive Landscape

TWM is a staple in the leveraged/inverse ETF market and is fully optionable with a liquid options chain. It occupies the middle ground between single-inverse funds and ultra-aggressive 3x funds. With a net expense ratio of 0.95% (reflecting fee waivers in place through September 2026), it is priced competitively for a complex geared product. It competes directly with other bearish small-cap vehicles and the long-only benchmarks.

Key peers and related inverse/leveraged vehicles include:

1. iShares Russell 2000 ETF: The primary 1x long benchmark that TWM seeks to double-inverse.
2. ProShares Short Russell2000: The 1x inverse sibling for investors seeking a less aggressive bearish position.
3. ProShares UltraPro Short Russell2000: The 3x leveraged inverse peer for maximum bearish conviction.
4. ProShares Ultra Russell2000: The 2x bullish mirror fund providing double positive daily leverage.
5. Direxion Daily Small Cap Bear 3X Shares: A primary 3x inverse competitor from Direxion.

Strategic Outlook and Innovation

In early 2026, TWM has seen elevated trading volume as investors navigate a "higher-for-longer" interest rate environment, which traditionally pressures the debt-heavy balance sheets of small-cap companies. The fund pays a quarterly dividend derived from interest earned on its cash and Treasury collateral; the most recent distribution on March 31, 2026, was $0.1446 per share, resulting in an annualized yield of approximately 4.41%.

Innovation at ProShares centers on maintaining high correlation to the daily inverse target while managing the costs of the swap reset. In the current market, TWM is frequently used as a "tail-risk" hedge for portfolios with heavy exposure to regional banks and domestic industrials, which are well-represented in the Russell 2000. For the 2026 trader, TWM remains a premier high-leverage tool for participating in small-cap downside.

Want more examples? TWLO Covered Calls | TWO Covered Calls