Credit Suisse launches Gold Shares Covered Call ETN
Credit Suisse has launched the Gold Shares Covered Call ETN (GLDI), the first exchange-traded product in the US market which offers investors access to a covered call strategy on a gold investment and is designed to pay variable monthly coupons.
GLDI, which tracks the Credit Suisse Nasdaq Gold FLOWS (Formula-Linked OverWrite Strategy)103 Index, seeks to implement a rolling "covered call" investment strategy by maintaining a notional long position in shares of the SPDR Gold Trust ETF (GLD) while notionally selling monthly out-of-the-money call options on that position.
Holders of GLDI will be entitled to receive variable monthly payments based on the notional option premiums received from the sale of the covered call options each month.
"Gold is often criticised as a portfolio investment because of its lack of any yield," says Greg King, head of exchange-traded products in Credit Suisse's Investment Bank. "Covered call strategies however, are designed to enhance yield in exchange for sacrificing part of the upside of an investment position. GLDI seeks to provide investors and their advisors an interesting new way to introduce monthly cash flows into their portfolios."
Credit Suisse partnered with Nasdaq OMX in creating the FLOWS suite of indices that the ETN tracks.
"We are elated that the Credit Suisse Gold FLOWS 103 Index ETN has listed on The Nasdaq Stock Market and is now available to investors," says Robert Hughes, vice president, Nasdaq OMX Global Indexes. "Based on uncertainty in the global marketplace, investors continue to look for access to gold and income. GLDI provides access to these two key investment themes in a transparent rules-based methodology. Credit Suisse is a valuable partner of ours and bringing the FLOWS index family and GLDI to market demonstrates our shared commitment to giving investors more flexibility in customising their investment strategies."
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