Roundhill listed a fund that loses nearly all unless the S&P 500 exceeds 10,000
Roundhill's S&P 500 Target 10,000 2030 fund listed on Thursday, October 1, and the firm says holders lose substantially all if the index does not exceed 10,000 on January 10, 2030.
Key takeaways
Roundhill listed XX, a fund of long-dated calls, on Thursday, October 1, and said holders lose substantially all of their money if the S&P 500 does not exceed 10,000 on January 10, 2030. Landing on that number still loses the premium the fund paid for the bet.
On Friday afternoon the index was at 7,721. It needs to rise 29.5% to reach the line in the fund's name.
By Friday, 99% of about $241,000 in the fund was one call on SPY, the S&P 500 fund Roundhill uses as its stand-in for the index. The call expires that January day, struck at 995.01. Roundhill treats a price of 995 on that fund as the stand-in for 10,000.
A call is the right to buy at a set price. If SPY finishes below 995.01 on that day, the right pays nothing. An index at 9,900 would still be short of 10,000, and so still short of the strike.
Roundhill sets out three endings. At 10,000 or below, it says the options expire worthless and holders should expect to lose all or substantially all. Above 10,000, but not by enough to cover what the fund paid for the options, the holder still takes a partial loss. Only a finish that clears 10,000 by more than that cost produces a gain, and then the payoff rises point for point with SPY.
Roundhill says the 0.99% yearly fee deepens a loss and shrinks a gain. The firm also said the fund does not reset its exposure each day, so the result depends on where the index finishes, not on the path it takes.
The January date is not a cash-out. Roundhill said the fund will buy a new set of calls, aimed at a new target and a new date, whether the first set pays or not. If the calls expire worthless, the firm expects about 1% to 10% of the fund left, and that cash funds the next bet. The holder does not pick the target.
Dave Mazza, Roundhill's chief executive, said investors can hold the fund "without managing expirations or rolls themselves."
Buffers and filings
XX is the sharp end of a week that also listed milder payoffs.
VanEck listed OCT, its second buffer fund on the S&P 500, at a 0.50% fee. For the year through September 30, 2027, VanEck set a cushion on the first 17% of losses and a cap on gains at 13.75%, both before fees and expenses.
AllianzIM listed OCTI on Thursday, the fourth fund in its international buffer line. It seeks to cushion the first 15% of losses in developed-market stocks outside the United States over the year that started that day.
On Thursday, Tidal Trust III filed to register the NestYield Ultra-Short Enhanced Treasury Income ETF. It would hold Treasury bills maturing in a year or less, add a limited amount of individual stocks and listed options, and aim to pay out 6% to 12% a year. The three-month Treasury bill yielded 4.17% that day.
A second filing that day would tie the Halo Autocallable Accumulator Fund to the worst of three US stock funds. If the weakest is down at the end, the holder can lose the full drop.
On Wednesday, Defiance filed to register six funds that would buy calls expiring in one to five business days. The calls would be on QQQ, Invesco's Nasdaq-100 fund, DRAM, Roundhill's memory-chip fund, and SMH, VanEck's semiconductor fund.
The other listings
The other funds that listed this week are portfolios, not payoffs.
BCOM is waived down from 1.45%. BCI, abrdn's fund on that same index, charges 0.26% and holds about $3.5 billion.
Bitwise said NRR is the first US fund to hold the NEAR token itself, and it will stake the tokens so the rewards, after fees, add to the value of the shares.
The week split in two. One group of new funds is a portfolio of assets. The other sells a payoff those assets do not produce on their own, and XX is the far end of it. Miss one number in January 2030, and nearly all the money is gone, with what is left rolled into a bet the holder did not choose.
ETFs in this story
Frequently asked questions
When does the S&P 500 have to exceed 10,000?
Holders lose substantially all of their money if the index does not exceed 10,000 on January 10, 2030.
What if the index finishes at exactly 10,000?
Landing on that number still loses the premium the fund paid for the bet.
What does the fund hold?
By Friday, 99% of about $241,000 in the fund was one call on SPY, struck at 995.01.
Does the fund end in January 2030?
Roundhill said the fund will buy a new set of calls, aimed at a new target and a new date, whether the first set pays or not.
