The Credit Suisse X-Links Crude Oil Shares Covered Call ETN (NASDAQ: USOI) is an investment that tracks the performance of the Credit Suisse Nasdaq WTI Crude Oil FLOWSTM 106 Index. This index uses a 'covered call' strategy, which involves selling monthly call options on shares of the United States Oil Fund, LP (USO) to generate income. The index's return is based on the changes in the price of USO shares and the premiums received from selling these options, minus the costs associated with implementing this strategy.
The USO Fund is an exchange-traded fund that tracks the price of West Texas Intermediate (WTI) crude oil. By using a covered call strategy on USO shares, the ETN aims to provide investors with a regular income stream while still allowing them to benefit from potential increases in the price of crude oil. This can be an attractive option for investors seeking to generate income from their investments in the energy sector.
The ETN is issued by Credit Suisse, a global financial institution, and is listed on the NASDAQ stock exchange under the ticker symbol USOI. As an exchange-traded note, it is a type of debt security that is backed by the credit of the issuer, Credit Suisse. This means that investors in the ETN are exposed to the credit risk of Credit Suisse, and the value of the ETN may fluctuate based on changes in the creditworthiness of the issuer.
The ETN's performance is designed to mirror the performance of the underlying index, which is calculated and maintained by Credit Suisse. The index is rebalanced monthly to ensure that it remains aligned with the underlying USO shares and the sold call options. This rebalancing process helps to maintain the ETN's exposure to the energy sector while generating income through the sale of options.