T-Rex Group, the exchange-traded funds (ETFs) issuer, is making waves in the financial world with its recent filing for new ETFs that take a leveraged long or short position in Microstrategy (MSTR). Microstrategy is a company known for its volatility, largely due to its heavy exposure to bitcoin. In an effort to capitalize on this volatility, T-Rex has filed for an ETF that will take a 2x long position in MSTR, as well as an ETF that will take a 2x inverted position in MSTR. Both of these products aim to provide investors with a leveraged long or short position on bitcoin, making them unique offerings in the ETF space.
The T-Rex 2X Long MSTR Daily Target ETF, as outlined in a filing published on the Securities and Exchange Commission’s EDGAR platform, is designed to achieve 200% of Microstrategy’s daily performance. This means that investors in this ETF stand to benefit from amplified gains when MSTR performs well, but also face increased losses when MSTR underperforms. Similarly, the ETF that takes a 2x inverted position in MSTR will provide investors with the opportunity to profit from MSTR’s declines, further adding to the range of strategies available in the ETF market.
MSTR’s volatility is a key driver of interest in these new ETF products. As the company closely tracks the price of bitcoin, its stock is subject to fluctuations in line with the world’s largest digital asset. Currently, MSTR’s implied volatility sits at a high of 85.6, although it is trending lower than its recent average. This volatility, coupled with the news that MSTR’s CEO, Michael Saylor, has announced plans to offer $500 million in convertible notes to boost its bitcoin holdings, sets the stage for potentially dramatic movements in the stock price.
According to Bloomberg ETF analyst Eric Balchunas, the ETFs filed by T-Rex are likely to be some of the most volatile ever seen in the U.S. market. Balchunas suggests that these products could have up to 20 times the volatility of the SPX, making them a high-risk, high-reward option for investors looking to capitalize on MSTR’s movements. Describing them as the “ghost pepper of ETF hot sauce,” Balchunas highlights the unique nature of these leveraged offerings and the potential for outsized returns or losses for investors who choose to participate.
In addition to T-Rex’s filings, other ETF issuers such as Defiance and GraniteShares have also listed products that take a short position in MSTR. These products offer an alternative strategy for investors looking to profit from MSTR’s potential decline, further diversifying the range of options available in the ETF space. With a growing interest in leveraged and inverse ETFs related to bitcoin and MSTR, it is clear that investors are seeking new ways to navigate the volatile digital asset landscape and capitalize on its potential movements.
Overall, the filing of these new ETFs by T-Rex Group represents a bold move in the world of exchange-traded funds. With a focus on providing investors with leveraged long or short positions in Microstrategy and its bitcoin-heavy portfolio, these products offer a unique opportunity to profit from the volatility of the digital asset market. As interest in bitcoin and related companies continues to grow, these ETFs could pave the way for a new era of investment strategies that cater to the evolving needs of investors seeking exposure to this dynamic sector.
