ProShares Ultra 7-10 Year Treasury (UST) Covered Calls

ProShares Ultra 7-10 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 7-10 Year Bond Index. The fund offers magnified exposure to intermediate-term U.S. Treasury securities, primarily through the use of derivative instruments. It serves as a tactical tool for investors looking to capitalize on falling interest rates or to hedge mid-duration fixed-income portfolios.

You can sell covered calls on ProShares Ultra 7-10 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 UST (prices last updated Tue 4:16 PM ET):

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Core Business and Products

ProShares Ultra 7-10 Year Treasury (UST) is a leveraged fixed-income vehicle designed to deliver two times (2x) the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index. This index tracks the performance of intermediate-term U.S. government debt with remaining maturities between seven and ten years. By targeting this specific segment of the yield curve, the fund provides significant sensitivity to shifts in intermediate interest rates, which are often influenced by Federal Reserve policy and medium-term inflation expectations.

To achieve its 2x geared objective, the fund primarily utilizes swap agreements with major financial institutions and may also invest in Treasury futures contracts. Because the fund rebalances its exposure on a daily basis, it is subject to the effects of compounding and volatility decay. This means that over periods longer than a single day, the fund’s total return may differ significantly from exactly twice the return of the underlying index. It is intended for sophisticated investors and short-term tactical traders who monitor their holdings daily.

Competitive Landscape

The market for intermediate-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 daily leverage targets provided. Traders often choose between these products based on their conviction level regarding the direction of interest rates and the specific duration profile they wish to target.

1. iShares 7-10 Year Treasury Bond ETF: The primary non-leveraged benchmark for the intermediate Treasury market and a highly liquid alternative for broad exposure.
2. Direxion Daily 7-10 Year Treasury Bull 3X Shares: A more aggressive competitor seeking to provide three times the daily positive performance of the intermediate Treasury market.
3. ProShares UltraShort 7-10 Year Treasury: The inverse sibling of the fund, providing twice the daily opposite performance of the intermediate Treasury index.
4. Vanguard Intermediate-Term Treasury ETF: A major low-cost, unleveraged peer that provides broad exposure to the intermediate segment of the Treasury market.
5. Direxion Daily 7-10 Year Treasury Bear 3X Shares: A high-leverage inverse peer for traders betting on rising intermediate interest rates.

Strategic Outlook and Innovation

The strategic focus for the fund centers on maintaining a high daily correlation with its target index while managing the costs and counterparty risks associated with its derivative-based portfolio. Management focuses on optimizing swap agreements and managing cash collateral to ensure the fund tracks its daily 2x return target as precisely as possible. This technical precision is vital for professional traders who use the fund as a capital-efficient building block for tactical duration management.

Future growth and utility of the fund depend on its ability to provide liquid access to the Treasury market during various economic cycles and shifts in monetary policy. By providing a way to magnify domestic fixed-income movements, the fund serves as a specialized tool in the toolkit of sophisticated investors. Management continues to monitor the evolving interest rate environment to ensure the fund remains a robust and effective instrument for those seeking to capitalize on the performance of intermediate-term U.S. government debt.

Want more examples? USRT Covered Calls | UTES Covered Calls