GraniteShares files three memory income ETFs while its 2x Micron fund holds $798 million

GraniteShares filed Monday for three income funds on memory-chip stocks. Its 2x Micron fund, CMULL, which seeks twice that stock's daily move, has traded since November 2024 and held $798 million as of Sunday.

That is about 32 times the $25 million in the eight single-stock autocallable funds GraniteShares already sells, a lineup that began on February 3 with a Tesla fund, CTLA, and an Nvidia fund, CANV.

GraniteShares already sells Micron income in another fund. The GraniteShares YieldBOOST MU ETF, BMUYY, writes puts on CMULL for a weekly payout and held $12.3 million as of Sunday, about half what the eight hold together. The filing would add a second income fund on the same stock.

On SK hynix, the GraniteShares fund that seeks twice the daily move of the US-listed shares, —SKUU, held $208 million as of Sunday. It launched on July 14, four days after those shares started trading on Nasdaq.

GraniteShares has no US fund on Sandisk. Tradr's fund that seeks twice Sandisk's daily move, CSNXX, held $2.01 billion as of Monday.

The Calamos Autocallable Income ETF, CCAIE, which holds autocallables tied to a large-cap strategy, held $1.4 billion as of Monday, beside the $25 million in GraniteShares' eight.

What the paper says

The SEC accepted the filing Monday. The prospectus is marked subject to completion: the information is not complete and may be changed, and the shares cannot be sold until the registration is effective.

The proposed funds are the GraniteShares Autocallable MU ETF, the GraniteShares Autocallable SNDK ETF and the GraniteShares Autocallable SKHY ETF. They have not begun operations. Tickers and fees are blank, Nasdaq is the exchange named, and the paper names no first trading day. It proposes to take effect 75 days after Monday.

The letters in those names are the stocks' tickers. The three would reference Micron Technology common stock, Sandisk Corporation common stock, and the American depositary shares of SK hynix. Only the SK hynix fund takes the chance that the Korean won moves against the dollar.

Each fund would seek income, and what the paper calls limited downside protection, from autocallables linked to one stock. An autocallable can pay a coupon on set dates if the stock stays above a barrier, and it can end early if the stock rises to a higher barrier. If the stock finishes below a lower barrier, the protection does not apply, and the loss can match the stock's own loss over that contract's life.

The filing says the funds expect to get that exposure only through swaps and options that pay cash. The aim is a monthly payout to shareholders, though a coupon on any one contract could be monthly or quarterly.

An autocall level could sit anywhere from 95% to 105% of the stock's starting price, and the coupon barrier and the maturity barrier anywhere from 50% to 95%. The other terms would depend on the market, set with the aim of supporting monthly payouts and preserving capital, and the paper aims for an average contract life of 12 to 24 months at the start of each month.

Through Friday, Sandisk had traded between $116 and $2,354 over the past year, and Micron between $180 and $1,255. That is what those barriers are up against.

In an April note on its Tesla and Nvidia funds, GraniteShares wrote that while volatility supports higher coupon potential, it also increases the probability of barrier breaches.

On May 12, explaining funds linked to Strategy and Coinbase, Will Rhind, the firm's founder and CEO, said those names' "volatility profiles make them well-suited to this structure." He was speaking about those launches, not these three.

The money on these names sits in leverage. Whether the buyers who put it there will take a coupon that can end early if the stock rises, and stop if it falls through a barrier, is the question this filing leaves open.