ProShares Ultra 20+ Year Treasury (UBT) Covered Calls

ProShares Ultra 20+ Year Treasury is a leveraged exchange-traded fund that seeks to provide daily investment results corresponding to twice the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. The fund offers magnified exposure to the long-term U.S. Treasury market, primarily through the use of derivative instruments. It is designed as a tactical tool for investors looking to capitalize on falling interest rates or to hedge long-duration fixed-income portfolios.

You can sell covered calls on ProShares Ultra 20+ Year Treasury 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 UBT (prices last updated Tue 9:55 AM ET):

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

Core Business and Products

ProShares Ultra 20+ Year Treasury (UBT) is a leveraged fixed-income vehicle designed to deliver two times (2x) the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. This index consists of U.S. Treasury securities with a remaining maturity of greater than twenty years. By targeting the long end of the yield curve, the fund provides high sensitivity to changes in long-term interest rates. It is an efficient way for traders to express a bullish view on long-term government debt.

To achieve its leveraged objective, the fund primarily utilizes swap agreements with major financial institutions and may also invest in Treasury futures contracts. Because the fund rebalances its positions daily, it is susceptible to compounding and volatility decay. This means its return over periods longer than a single day may differ from two times the return of the index. The fund is intended for sophisticated investors who monitor their holdings daily and understand the risks associated with geared exposure.

Competitive Landscape

The market for long-term Treasury exposure is highly liquid and includes various unleveraged, leveraged, and inverse products. Competition is driven by tracking accuracy, expense ratios, and the specific level of leverage provided. Investors often choose between different tiers of leverage depending on their risk tolerance and conviction level regarding interest rate movements.

1. iShares 20+ Year Treasury Bond ETF: The primary non-leveraged benchmark for the long-term Treasury market and the most liquid instrument in the category.
2. Direxion Daily 20+ Year Treasury Bull 3X Shares: A more aggressive competitor providing three times the daily positive exposure to the long-bond market.
3. ProShares UltraShort 20+ Year Treasury: The inverse sibling of the fund, providing twice the daily opposite performance of the long-term Treasury market.
4. Vanguard Extended Duration Treasury ETF: A non-leveraged peer that achieves high duration through the use of Treasury strips rather than derivatives.
5. Direxion Daily 20+ Year Treasury Bear 3X Shares: A high-leverage inverse peer for traders betting on rising long-term interest rates.

Strategic Outlook and Innovation

The strategic focus for this fund involves maintaining a tight correlation with its underlying index while minimizing the transaction costs of daily rebalancing. By optimizing its basket of swap counterparties, the fund aims to provide consistent exposure even during periods of high market volatility. This technical precision is vital for users who employ the fund as a capital-efficient building block in broader fixed-income strategies.

Future innovation centers on enhancing the fund’s liquidity and accessibility within traditional brokerage accounts. Management continues to refine the collateral management process, using high-quality short-term instruments to back its derivative positions. This ensures that the fund remains a robust tool for tactical duration management and interest rate speculation. The fund continues to play a specialized role for investors seeking to magnify their exposure to the safety and price movements of U.S. government debt.

Want more examples? UBSI Covered Calls | UCB Covered Calls