TAIWAN: TAIFEX and TIP Support the Launch of First Index Option Strategy ETN Tracking Taiwan Strategy Indices

Tuesday December 6 2022

On 5^th December 2022, Taiwan Futures Exchange (TAIFEX) and Taiwan Index Plus (TIP) welcomed Yuanta Securities’ issuance of the first covered call Exchange-traded notes (ETN) tracking one of the indices in the Taiwan Strategy Index series – the TIP TAIFEX TAIEX Covered Call OTM 5% Total Return Index (Covered Call Index). A total of 257,000 shares were traded on the first day of launch, marking it the market’s third most heavily-traded ETN in daily trading volume. 

Taiwan Strategy Indices are jointly developed by TAIFEX and TIP with an aim to provide investors with enhanced index tracking accuracy and greater diversity in trading strategy execution, leveraging the liquidity and flexibility of Taiwan’s futures and options trading. In addition to Covered Call Index, two other indices currently in the series include the TIP TAIFEX TAIEX Futures Index and the TIP TAIFEX Smart Multi-factor 30 Market Neutral Index.  

The underlying index of the new ETN, the Covered Call Index, replicates returns from a covered call strategy of investing in the market benchmark TAIEX. By holding a long position in the TAIEX while simultaneously selling TAIEX call options, the strategy index blends equity index and options contracts to enhance investment returns. The new index option strategy ETN represents a milestone in the development of Taiwan’s financial market, and is set to introduce new liquidity to its futures and securities trading activities, while widening the product range and trading strategies available to investors. 

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