Credit Suisse X-Links Crude Oil Shares Covered Call ETN (USOI)USOI

ETF Credit Suisse X-Links Crude Oil Shares Covered Call ETN (USOI)

Profile:

USOI is an exchange-traded note (ETN) that tracks the Credit Suisse X-Links Crude Oil Shares Covered Call Index. This index invests in WTI light, sweet crude oil futures contracts and writes call options on those contracts. Essentially, USOI seeks to generate income through the covered call strategy, which involves selling call options on its underlying assets.

Objective:

The primary investment goal of USOI is to provide income to investors in the form of monthly distributions. This income is generated through the sale of covered calls on its underlying holdings.

Issuer:

Credit Suisse is the issuer of USOI. It is a global investment bank with a strong reputation and a long history in the financial services industry.

Reputation and Reliability: Credit Suisse is a well-known and respected financial institution with a long track record of success. However, it has faced challenges in recent years, including legal and regulatory issues.

Management: The management team responsible for USOI has extensive experience in the financial markets. They have a deep understanding of the covered call strategy and the crude oil market.

Market Share:

USOI is a relatively small player in the crude oil ETN market, with a market share of approximately 2%.

Total Net Assets:

USOI has approximately $137.5 million in total net assets as of November 10, 2023.

Moat:

USOI's primary competitive advantage is its covered call strategy. This strategy allows the ETF to generate income even when the price of crude oil falls. Additionally, USOI benefits from Credit Suisse's extensive resources and expertise in the financial markets.

Financial Performance:

USOI has a history of providing consistent monthly distributions to investors. However, the amount of these distributions has varied over time, depending on the performance of the underlying crude oil market. On a year-to-date basis as of November 10, 2023, USOI has generated a total return of -4.01%.

Benchmark Comparison: USOI has underperformed its benchmark index, the S&P GSCI Crude Oil Index, year-to-date.

Growth Trajectory:

The growth trajectory of USOI is dependent on the performance of the underlying crude oil market. If oil prices rise, USOI is likely to generate higher distributions and experience growth in its net assets. However, if oil prices fall, USOI may face challenges.

Liquidity:

Average Trading Volume: USOI has an average trading volume of approximately 400,000 shares per day.

Bid-Ask Spread: The bid-ask spread for USOI is typically around $0.05.

Market Dynamics:

The crude oil market is influenced by a variety of factors, including economic growth, geopolitical events, and supply and demand dynamics. These factors can all have a significant impact on the price of crude oil and, consequently, on the performance of USOI.

Competitors:

• DBO: The United States Oil Fund, LP (DBO) is another exchange-traded note that tracks the performance of WTI light, sweet crude oil futures contracts. It has a market share of approximately 70%.
• USO: The United States Oil Fund (USO) is an exchange-traded fund that also tracks the performance of WTI light, sweet crude oil futures contracts. It has a market share of approximately 12%.

Expense Ratio:

USOI has an expense ratio of 0.89%.

Investment approach and strategy:

• Strategy: USOI uses a covered call strategy, where it invests in WTI light, sweet crude oil futures contracts and writes call options on those contracts.
• Composition: The majority of USOI's assets are invested in WTI light, sweet crude oil futures contracts. It also holds a small amount of cash and equivalents.

Key Points:

• USOI seeks to generate income through the covered call strategy.
• It has a history of providing consistent monthly distributions.
• Its performance is dependent on the underlying crude oil market.
• It has lower liquidity compared to its major competitors.

Risks:

• Volatility: The price of crude oil is highly volatile, which can lead to significant fluctuations in the value of USOI.
• Market Risk: USOI is subject to the risks associated with the underlying crude oil market, including changes in supply and demand, geopolitical events, and economic factors.
• Counterparty Risk: USOI is exposed to the risk that the counterparty to its options contracts may default on its obligations.

Who Should Consider Investing:

USOI is suitable for investors who are seeking income and are comfortable with the risks associated with the covered call strategy and the crude oil market. Investors should carefully consider their risk tolerance and investment objectives before investing in USOI.

Fundamental Rating Based on AI:

Rating: 6/10

USOI receives a fundamental rating of 6/10 based on an analysis of its financial health, market position, and future prospects. The rating considers factors such as USOI's track record of generating income, its exposure to the volatile crude oil market, and its relatively low liquidity.

Justification:

• USOI has a history of providing consistent monthly distributions, which is a positive factor.
• However, USOI's value is highly dependent on the performance of the underlying crude oil market, which is a risk factor.
• Additionally, USOI has lower liquidity compared to its major competitors, which could make it more difficult to buy or sell shares.

Overall, USOI is a suitable investment for investors who are seeking income and are comfortable with the risks associated with the covered call strategy and the crude oil market. However, investors should carefully consider their risk tolerance and investment objectives before investing in USOI.

Resources and Disclaimers:

• Credit Suisse website: https://www.credit-suisse.com/us/en/wealth-management/products-and-services/etps/etns/usoi.html
• ETF.com: https://www.etf.com/etf-profile/USO/USO
• Morningstar: https://www.morningstar.com/etfs/xnas/usoi/quote

Disclaimer: The information provided in this analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.