In This Article:
(Bloomberg) -- The ETF industry’s upstart-in-chief is back with another roll of the new-product dice — this time betting on a game-changing expansion of Wall Street’s zero-day options boom.
Most Read from Bloomberg
-
Texas HOA Charged With Discrimination for Banning Section 8 Renters
-
How Sanctuary Cities Are Preparing for Another Showdown With Trump
-
LA Schools Wrecked by Fires Plead on GoFundMe for Help to Reopen
Matt Tuttle, who struck gold with leveraged meme-stock funds but fell flat with his Jim Cramer ETFs, has filed to create a line of new offerings that will trade fast-twitch derivatives on popular companies beloved by the retail-investing masses. Think Nvidia Corp., Tesla Inc., MicroStrategy Inc. and more.
The gamble? Publicly traded single-stock options aren’t available on a daily basis, meaning 0DTE bets can currently only occur on a Friday when weekly, monthly and quarterly contracts expire. Yet Tuttle says he is convinced it’s a matter of time before derivatives tied to individual companies shift to daily expiry.
“Whether that’s three months from now, six months from now, two years from now, I have no idea,” the Tuttle Capital Management CEO said. “My thinking is if I do believe that’s going to happen, I want to be first in line for it.”
In the meantime, Tuttle has come up with a workaround for his new ETFs, which could launch in the first half of the year provided the Securities and Exchange Commission doesn’t object. They’ll trade so-called Flex options — customized contracts that allow users to set terms such as strike prices and expiration dates — and roll them on a daily basis. Such contracts can be listed on exchanges without approvals in advance, Tuttle said.
America’s dynamic $11 trillion ETF industry is no stranger to investment strategies being prepared before demand, feasibility or even regulatory approval is assured. Increasingly complicated strategies featuring diverse leverage and return targets are being packaged into the easily traded wrapper and sold to the masses.
Tuttle is seeking to capitalize on two hot but controversial trends on Wall Street: Selling options to generate income, and trading those with zero days to expiration, or 0DTE. His firm plans a series of so-called 0DTE covered-call ETFs targeting mostly technology megacaps including Apple Inc. and Microsoft Corp.
To Ben Johnson, head of client solutions at Morningstar, the industry’s emphasis on first-mover advantage and apparent indifference to the risks of many strategies highlight the growing competition between firms for new business.