New ETFs Riding Tesla’s Famous Volatility Arrive on Wall Street
Exchange-traded funds offering investors betting on or against Tesla Inc. two times the returns of the volatile stock launched Thursday, after what seemed like a long-shot bid at winning regulatory approval.
The T-Rex 2X Long Tesla Daily Target ETF, (ticker TSLT) uses derivatives to track twice the daily returns of Elon Musk’s electric-vehicle maker while the T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ) seeks to deliver the opposite return of the stock by the same magnitude.
They’re the first double-leveraged single-stock ETFs focused on Tesla to trade in the US market, according to data compiled by Bloomberg Intelligence. Previous iterations for similar ETFs hadn’t made it past regulatory hurdles tied to volatility rules.
The Securities and Exchange Commission is seemingly softening its stance toward such products, after allowing a 2x Bitcoin futures ETF by Volatility Shares to launch earlier this year.
“We are excited to finally be able to break the 2X barrier and expect this will usher in a whole new generation of trading vehicles to offer more choices for investors when it comes to speculating or hedging,” said Matthew Tuttle of Tuttle Capital Management, which in partnership with REX Shares is behind the double-leveraged Tesla ETFs.
It wasn’t immediately clear how Tuttle and REX Shares assuaged regulatory concerns regarding volatility. Tuttle says that “nothing changed, just figured it out and learned from my mistakes.”