RDTE sells zero-days-to-expiry ("0DTE")
options each day to seek income generation. The fund seeks to pay
weekly distributions to fund shareholders.
NEW
YORK, Sept. 10, 2024 /PRNewswire/ -- Roundhill
Investments, an ETF sponsor focused on innovative financial
products, is pleased to announce the launch of the Roundhill Small
Cap 0DTE Covered Call Strategy ETF (RDTE), which begins trading on
Cboe BZX today.
RDTE joins Roundhill's growing suite of weekly-pay income funds,
including the Roundhill S&P® 500 0DTE Covered Call Strategy ETF
(XDTE) and the Roundhill Innovation-100 0DTE Covered Call Strategy
ETF (QDTE). Following the introduction of RDTE, Roundhill now
offers its innovative 0DTE covered call strategy across all three
major U.S. equity indices.
"Following the successful launches of QDTE and XDTE, we've
received significant demand from investors for a small cap
version," said Dave Mazza, Chief
Executive Officer at Roundhill Investments. "As the market broadens
out and small caps continue to participate, RDTE provides a tool
for investors looking to generate attractive weekly income
potential alongside their equity exposure."
About Roundhill Investments:
Founded in 2018, Roundhill Investments is an SEC-registered
investment advisor focused on innovative exchange-traded funds.
Roundhill's suite of ETFs offers distinct and differentiated
exposures across thematic equity, options income, and trading
vehicles. Roundhill offers a depth of ETF knowledge and experience,
as the team has collectively launched more than 100+ ETFs including
several first-to-market products. To learn more about the company,
please visit roundhillinvestments.com.
Investors should consider the investment objectives, risks,
charges, and expenses carefully before investing. For a prospectus
or summary prospectus, if available, with this and other
information about the Fund, please call 1-855-561-5728 or visit our
website at https://www.roundhillinvestments.com/etf/RDTE. Read
the prospectus or summary prospectus carefully before
investing.
All investing involves risk, including the risk of loss of
principal. There is no guarantee the investment strategy will be
successful. For a detailed list of fund risks see the
prospectus.
Covered Call Strategy Risk. A covered call strategy
involves writing (selling) covered call options in return for the
receipt of premiums. The seller of the option gives up the
opportunity to benefit from price increases in the underlying
instrument above the exercise price of the options, but continues
to bear the risk of underlying instrument price declines. The
premiums received from the options may not be sufficient to offset
any losses sustained from underlying instrument price declines.
Exchanges may suspend the trading of options during periods of
abnormal market volatility. Suspension of trading may mean that an
option seller is unable to sell options at a time that may be
desirable or advantageous to do so.
Additionally, the Fund is a "synthetic" covered call strategy,
meaning that it derives its long exposure to the Small Cap Index
from options that utilize the Small Cap Index as the reference
asset. This synthetic exposure increases the likelihood that the
Fund's returns may not always precisely align with the returns of
the Small Cap Index.
Options Risk. The use of options involves investment
strategies and risks different from those associated with ordinary
portfolio securities transactions and depends on the ability of the
Fund's portfolio managers to forecast market movements correctly.
The prices of options are volatile and are influenced by, among
other things, actual and anticipated changes in the value of the
underlying instrument, or in interest or currency exchange rates,
including the anticipated volatility, which in turn are affected by
fiscal and monetary policies and by national and international
political and economic events. The effective use of options also
depends on the Fund's ability to terminate option positions at
times deemed desirable to do so. There is no assurance that the
Fund will be able to effect closing transactions at any particular
time or at an acceptable price. In addition, there may at times be
an imperfect correlation between the movement in values of options
and their underlying securities and there may at times not be a
liquid secondary market for certain options. Lastly, the trading of
options is subject to transaction costs that may impact the Fund's
returns.
FLEX Options Risk. Trading FLEX Options involves risks
different from, or possibly greater than, the risks associated with
investing directly in securities. The Fund may experience losses
from specific FLEX Option positions and certain FLEX Option
positions may expire worthless. The FLEX Options are listed on an
exchange; however, no one can guarantee that a liquid secondary
trading market will exist for the FLEX Options.
0DTE Options Risk.*** The Fund's use of zero days to
expiration, known as "0DTE" options, presents additional risks. Due
to the short time until their expiration, 0DTE options are more
sensitive to sudden price movements and market volatility than
options with more time until expiration. Because of this, the
timing of trades utilizing 0DTE options becomes more critical.
Although the Fund intends to enter into 0DTE options trades on
market open, or shortly thereafter, even a slight delay in the
execution of these trades can significantly impact the outcome of
the trade. Such options may also suffer from low liquidity, making
it more difficult for the Fund to enter into its positions each
morning at desired prices. The bid-ask spreads on 0DTE options can
be wider than with traditional options, increasing the Fund's
transaction costs and negatively affecting its returns.
Additionally, the proliferation of 0DTE options is relatively new
and may therefore be subject to rule changes and operational
frictions. To the extent that the OCC enacts new rules relating
to 0DTE options that make it impractical or impossible for the Fund
to utilize 0DTE options to effectuate its investment strategy, it
may instead utilize options with the shortest remaining maturity
available or it may utilize swap agreements to provide the desired
exposure.
New Fund Risk. The fund is new and has a limited
operating history.
Derivatives Risk. The use of derivative instruments
(i.e. options contracts) involves risks different from, or possibly
greater than, the risks associated with investing directly in
securities and other traditional investments.
Distribution Tax Risk. The Fund currently expects to
make distributions on a weekly basis. These distributions may
exceed the Fund's income and gains for the Fund's taxable year.
Distributions in excess of the Fund's current and accumulated
earnings and profits will be treated as a return of capital.
Small Cap Index Risks. The Fund will have significant
exposure to the Small Cap Index through its investments in options
that utilize the Small Cap Index as the reference asset.
Small Capitalization Companies Risk. Small and/or mid
capitalization companies may be more vulnerable to adverse general
market or economic developments, and their securities may be less
liquid and may experience greater price volatility than larger,
more established companies as a result of several factors,
including limited trading volumes, fewer products or financial
resources, management inexperience and less publicly available
information. Accordingly, such companies are generally subject to
greater market risk than larger, more established companies.
Roundhill Financial Inc. serves as the investment advisor. The
Funds are distributed by Foreside Fund Services, LLC which is not
affiliated with Roundhill Financial Inc., U.S. Bank, or any of
their affiliates.
Glossary
Options: An option is a contract sold by one party
to another that gives the buyer the right, but not the obligation,
to buy (call) or sell (put) a stock at an agreed upon price within
a certain period or on a specific date.
Covered Call Strategy: A covered call strategy involves
writing (selling) covered call options in return for the receipt of
premiums. The seller of the option gives up the opportunity to
benefit from price increases in the underlying instrument above the
exercise price of the options, but continues to bear the risk of
underlying instrument price declines.
Out-of-the-Money Options: Out-of-the-money options
are options whose strike price is above the market price of the
underlying asset.
0DTE Options: 0DTE (zero days to expiration) are
options that are set to expire at the end of the trading day on
which they are written.
Strike: Price at which the option holder may buy or
sell the underlying security, as defined in the terms of the option
contract.
Small Cap Index: The Small Cap Index is a measure of the
performance of the small-capitalization sector of the U.S. equity
market, as defined by FTSE Russell. The Small Cap Index is a subset
of the Russell 3000® Index (the "Broad Market Index"), which
measures the performance of the broad U.S. equity market, as
defined by FTSE Russell. The Small Cap Index is a float-adjusted
capitalization-weighted index of equity securities issued by the
smallest issuers in the Broad Market Index.
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SOURCE Roundhill Investments