WisdomTree Floating Rate Treasury Fund (USFR) Covered Calls
WisdomTree Floating Rate Treasury Fund (USFR) provides investors with exposure to U.S. Treasury Floating Rate Notes (FRNs). Unlike fixed-rate bonds, these securities feature interest rates that reset weekly based on the most recent 13-week U.S. Treasury bill auction. This structure significantly reduces interest rate sensitivity, making USFR a popular vehicle for capital preservation and income generation in volatile rate environments.
You can sell covered calls on WisdomTree Floating Rate Treasury Fund 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 USFR (prices last updated Mon 12:05 PM ET):
| WisdomTree Floating Rate Treasury Fund (USFR) Stock Quote | ||||||
|---|---|---|---|---|---|---|
| Last | Change | Bid | Ask | Volume | P/E | Market Cap |
| 50.34 | 0.00 | 50.33 | 50.34 | 2.3M | - | 18 |
| Covered Calls For WisdomTree Floating Rate Treasury Fund (USFR) | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Net Debit | Return If Flat |
Annualized Return If Flat |
|
| Apr 17 | 50 | 0.00 | 50.34 | -0.7% | -13.4% | |
| May 15 | 50 | 0.00 | 50.34 | -0.7% | -5.4% | |
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The WisdomTree Floating Rate Treasury Fund is a passive, index-tracking ETF that offers a strategic alternative to traditional short-term debt instruments. By holding Treasury FRNs, the fund delivers yield that adjusts in line with market interest rate changes, providing a defensive "counterweight" to duration risk in broader fixed-income portfolios.
Core Business and Investment Strategy
USFR tracks the Bloomberg U.S. Treasury Floating Rate Bond Index. Its investment approach is characterized by:
- Interest Rate Reset: Coupons reset weekly based on 3-month Treasury bill auction results, limiting the price volatility typically associated with rising rates.
- High Credit Quality: The portfolio consists entirely of U.S. government-backed Treasury obligations, minimizing credit risk.
- Low Duration: With an extremely short effective duration, the fund is largely insulated from the price drops that plague intermediate and long-term bonds when interest rates rise.
- Liquidity & Transparency: As an exchange-traded fund, USFR provides daily liquidity and transparent exposure to the U.S. government floating rate debt market.
Competitive Landscape
USFR operates within the ultra-short fixed-income space. While it is technically optionable, it is primarily used for its cash-equivalent qualities rather than for active options speculation. Its competitive set includes:
- Direct Treasury Alternatives: SGOV and BIL, which track short-term Treasury bills.
- Broader Bond Vehicles: Investors often "barbell" USFR with longer-duration ETFs like TLT or aggregate bond funds like AGG to manage portfolio-wide interest rate sensitivity.
Strategic Outlook (2026)
In 2026, USFR continues to serve as a cornerstone for investors navigating uncertainty in Federal Reserve policy. By providing a yield that floats with short-term rates, it remains a resilient tool for managing cash reserves and mitigating volatility. It is widely utilized as a "parking place" for capital during periods where the yield curve is inverted or interest rate direction is unclear.
| Top 10 Open Interest For Apr 17 Expiration | Top 5 High Yield | |||||
|---|---|---|---|---|---|---|
| 1. | SLV covered calls | 6. | QQQ covered calls | 1. | REPL covered calls | |
| 2. | EEM covered calls | 7. | GLD covered calls | 2. | CMPX covered calls | |
| 3. | NVDA covered calls | 8. | TLT covered calls | 3. | NKE covered calls | |
| 4. | KWEB covered calls | 9. | HYG covered calls | 4. | BE covered calls | |
| 5. | SPY covered calls | 10. | EWZ covered calls | 5. | ONDS covered calls | |
Want more examples? USFD Covered Calls | USG Covered Calls
Risk Disclosure: Trading options involves significant risk and is not suitable for all investors. The information provided on this website is for educational and informational purposes only and does not constitute financial, investment, tax, or legal advice. Nothing contained on this site is an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities or financial instruments.
Covered Call Strategy Risks: While covered call writing is often considered a conservative options strategy, it is not without risk. By selling a covered call, you are limiting your potential upside profit from the underlying stock. You remain exposed to the full downside risk of owning the underlying stock. In the event of a significant decline in the stock price, the premium received may not be sufficient to offset your losses.
No Guarantee of Performance: Past performance is not indicative of future results. Any examples, calculations, or hypothetical scenarios presented on this site are for illustrative purposes only and do not guarantee future returns or outcomes. Market conditions, liquidity, and trading system failures can affect your ability to execute trades at desired prices.
You should consult with a qualified professional advisor and conduct your own due diligence before making any investment decisions. By using this website, you acknowledge that you are responsible for your own investment decisions and agree to release this site and its affiliates from any liability relating to your use of this information. See the OCC's Characteristics and Risks of Standardized Options for more info.
