Displaying items by tag: hedging

Ethena has introduced USDtb, a new stablecoin backed predominantly by BlackRock’s tokenized BUIDL fund. Over 90% of USDtb’s reserves will consist of U.S. government debt, cash, and repos, with the remainder held in stablecoins and tokenized Treasuries. 

Designed to complement Ethena’s synthetic dollar product, USDe, USDtb serves as a reserve asset to mitigate risks associated with USDe’s derivative-based strategy during unfavorable market conditions. The reserves for USDtb will be managed by Pallas, a BVI-based entity, while Ethena Labs will provide oversight and investment management through its subsidiaries. 

The stablecoin has undergone independent security audits and is supported by major liquidity providers such as Jump and GSR Markets. 

Finsum: While bitcoin is drawing a lot of crypto attention, stable coin could be a wonderful opportunity looking for slightly different in crypto. 

With the U.S. presidential election approaching, markets are anticipating potential volatility, and investors are weighing where to allocate their money. While some hedge funds are positioning for “Trump trades,” U.S. Global Investors instead sees growing opportunities in alternative assets like gold and Bitcoin. 

Paul Tudor Jones shares this perspective, highlighting these assets as hedges against rising U.S. debt and inflation concerns. The national debt has reached unsustainable levels, doubling its GDP ratio over 25 years, and the federal deficit continues to climb. 

As inflation impacts traditional assets, commodities like gold, silver, and Bitcoin have become more attractive as they tend to perform well in inflationary environments. 

Finsum: Despite election-related uncertainties, holding alternative assets may help investors maintain portfolio stability in the long run.

Nvidia's stock surge has had an outsized influence on the S&P 500 this year, accounting for nearly a quarter of the index's 17% gain. The company's 140% rise, driven by strong demand for its AI chips, has been a key market driver, with a single-day 8.2% rally lifting the S&P 500 to its biggest gain in almost two years. 

Investors are concerned that a downturn in Nvidia could drag the broader market down, as the index has struggled to rise on days when the chipmaker's shares decline. 

Nvidia’s dominance in the options market, where it accounts for up to 30% of daily stock options volume, has further amplified its stock movements. Analysts warn that if demand for Nvidia's products weakens, it could trigger a broader market sell-off.

Finsum: Investors need to consider how options plays can lead to better outcomes for their portfolios, and situational plays that compliment their current book.

BlackRock has introduced a 'buffer' ETF, the iShares Large Cap Max Buffer Jun ETF (ticker: MAXJ), designed to offer a 100% downside hedge for cautious investors. This ETF tracks the S&P 500 using options with an upside cap, aiming to protect against losses for about a year.

 Buffer ETFs are beneficial as they help maximize returns while providing downside protection during volatile market periods. 

They are especially attractive to investors wary of market volatility and economic uncertainties, such as inflation and potential interest rate hikes. BlackRock's extensive reach and marketing capabilities could help it catch up with competitors in this space.

Finsum: BlackRock’s pioneering in quantitative strategies puts them in a good position to maximize the abilities of buffer ETFs

Recent fluctuations in the market have fueled investors' desire for strategies that mitigate risk. Defined-outcome exchange-traded funds, also known as "buffer ETFs," have emerged as a solution, aiming to protect investors from losses on a designated index. 

The proliferation of these funds has been remarkable, with assets ballooning to over $22 billion from under $200 million in 2018, with 169 offerings available presently. These ETFs typically offer index returns while mitigating downside risk, achieved by sacrificing a portion of potential upside gains. 

By employing various options structures, such as funds with upside caps or partial upside exposure, investors can tailor their risk-reward profiles according to their preferences. Despite operational nuances and fees, most of these ETFs have demonstrated their ability to shield investors from market downturns while offering competitive returns.

Finsum: These last five years have been critical examples of why many investors need buffer ETFs to both capture gains and hedge losses.