The Credit Suisse X-Links Silver Shares Covered Call ETN (NASDAQ:SLVO) is an exchange-traded note that tracks the performance of a specific investment strategy. This strategy, known as a 'covered call' strategy, involves holding shares of the iShares Silver Trust (SLV) and simultaneously selling call options on those shares.
The index that the ETN follows measures the returns of this strategy by taking into account the changes in the price of the SLV shares, as well as the premiums received from selling the call options. These premiums are essentially the income generated from selling the options. However, the index also subtracts the transaction costs associated with implementing this strategy, such as brokerage commissions and other fees.
By using this covered call strategy, the ETN aims to provide investors with a potentially more stable source of returns, as the premiums received from selling the call options can help to offset any potential losses from the underlying SLV shares. At the same time, the ETN still allows investors to benefit from any potential increases in the price of silver, as reflected in the SLV shares.
As an ETN, the Credit Suisse X-Links Silver Shares Covered Call ETN is a type of debt security that is backed by the credit of the issuer, Credit Suisse. This means that investors are essentially lending money to Credit Suisse, which in turn uses that money to implement the covered call strategy and tracks the performance of the index.
The ETN is listed on the NASDAQ exchange under the ticker symbol SLVO, making it easily accessible to investors. Additionally, as a debt security, the ETN has a specific maturity date, at which point it will be redeemed at a price based on the performance of the index.