What Is USOI? UBS ETRACS Crude Oil Shares Covered Call ETN

USOI is the UBS ETRACS Crude Oil Shares Covered Call ETN, launched in April 2017. It is an exchange-traded note that applies a covered-call strategy on the United States Oil Fund (USO), selling call options against oil exposure to generate a very high monthly distribution. It is a niche income and trading product, not a simple way to own oil.

USOI, listed on Nasdaq. The full name is UBS ETRACS Crude Oil Shares Covered Call ETN. 'ETRACS' is UBS's brand for its family of exchange-traded notes.

USOI is an exchange-traded note (ETN), not an ETF. This distinction matters: an ETN is unsecured senior debt of the issuer (UBS), so you hold a promise from UBS rather than a claim on a pool of assets. If UBS were to default, ETN holders could lose money regardless of how the underlying oil strategy performed. ETFs, by contrast, hold actual assets in a fund.

Because USOI is an unsecured note issued by UBS AG, its value depends on UBS's ability to pay. This is called issuer or counterparty credit risk. Even if the underlying covered-call oil strategy performs well, the note's value is ultimately backed only by UBS's creditworthiness, which is a risk that physically backed oil ETFs do not carry.

USOI's headline distribution, recently around 49%, comes from selling call options against its oil exposure each month and paying out the option premium. High oil volatility produces large option premiums, which fund large distributions. However, this yield is not a stable dividend: it varies with oil volatility and option pricing, and the distribution can include return of your own capital rather than pure income.

A covered-call strategy holds an asset (here, oil exposure via USO) and sells call options against it. The seller collects option premium up front, which becomes income, but in exchange gives up gains above the option's strike price. So when oil rises sharply, USOI's upside is capped, while when oil falls, it still bears the loss (cushioned only by the premium collected). The trade is income now for limited upside later.

Yes. The covered-call overlay caps gains when oil rallies strongly, because the call options USOI sells limit how much it can profit above the strike price. In a sustained oil bull market, USOI typically lags a plain oil fund like USO. The strategy is designed to harvest income from oil volatility, not to capture the full upside of rising oil prices.

0.85% per year, charged as an investor fee accrued daily against the note. That is on top of the option and tracking mechanics of the covered-call strategy. As with any ETN, the fee reduces the note's value over time and is separate from the distributions it pays.

USOI trades like a stock during US market hours on Nasdaq through brokers that permit ETN trading, including Fidelity, Schwab, and others. Given its complexity, credit risk, and capped-upside profile, it is important to understand covered-call and ETN mechanics before buying. Some brokers restrict or require acknowledgments for complex products like this.

Approximately $243.65 million as of July 2026, small relative to mainstream ETFs. Niche, high-yield ETNs like this tend to have modest and variable asset bases, and lower liquidity can mean wider bid-ask spreads than large ETFs.

Not in the way a stock dividend is. The distribution comes from option premium and can include return of capital, meaning part of what you receive may be your own principal being returned rather than investment income. The roughly 49% headline figure also fluctuates with oil volatility, so it should not be treated as a dependable, repeatable annual yield.

USO (United States Oil Fund) provides straightforward exposure to oil via futures, capturing oil's price moves up and down without an options overlay. USOI adds a covered-call strategy on top of USO shares, trading away upside in rising markets for a high income distribution, and it is an ETN with UBS credit risk rather than a fund. USO is the direct oil play; USOI is the income-focused, capped-upside derivative of it.

USOI targets investors who want high income from oil volatility and understand covered-call and ETN mechanics, but it carries capped upside, full downside, UBS credit risk, and distributions that can include return of capital. It is complex and niche. Walnut is not an investment adviser; anyone considering it should be certain they understand the structure and risks first.

April 25, 2017. UBS launched it as part of its ETRACS family of exchange-traded notes, extending the covered-call income concept to crude oil. It has remained a small, specialized product aimed at income-seeking traders rather than mainstream investors.

Put a few fields side by side: the expense ratio (fees compound over decades), the index or strategy it tracks, the top holdings and how much they overlap with what you already own, the dividend yield, and the AUM, liquidity, and bid-ask spread that affect trading costs. For index funds, tracking error (how closely it follows its index) and tax efficiency matter too. USOI's figures are above; the full method is in Walnut's guide on how to compare ETFs.