Introduction to Opta Exchange Traded Notes
Opta exchange traded notes (ETNs) are senior, unsecured debt securities issued by Lehman Brothers Holdings Inc. (the "Issuer"). They are designed to track the performance of market indices (net of investor fees) and allow investors to gain exposure to such indices with relative ease.
ETNs are listed on major U.S. exchanges and can be traded like any other listed security.
There are important differences between exchange traded notes (ETNs), exchange traded funds (ETFs), and index mutual funds (see "ETNs vs. Comparable Instruments" in the Learn More section of this website).
ETN Returns
Opta ETN returns are tied to the performance of an index (e.g., the Lehman Brothers Commodity Index Pure Beta Total Return or the S&P Listed Private Equity Index Net Return).
Exposure to Underlying Indices- ETN investors receive exposure to the performance of the underlying index. Upon sale, redemption, or maturity of the ETN, the investor receives a cash payment that reflects the performance of the underlying index (net of investor fees).
- Since ETNs are exchange-traded instruments investors may be able to trade them through a brokerage account, just like exchange-listed stocks. There is no guarantee though that an active and liquid trading market will develop for all ETNs.
- Typically, there are no periodic coupon payments or cash distributions on ETNs prior to maturity or sale.
- The Issuer charges investor fees that accrue over the term of the ETN (see the relevant prospectus for details on how investor fees are calculated).
Investment Mechanics
The "Offerings" section of this website provides investors with an overview of the Opta ETN family, as well as current secondary market data and printer-friendly ETN fact sheets that are updated to show daily performance (as of market close).
Investing in ETNsETNs are securities listed and traded on major U.S. exchanges. They are quoted under their respective ticker symbols just like any other exchange-traded security.
LiquidationThere are three ways in which investors can realize a return (or loss) on an ETN investment:
- Sell the ETNs on an exchange during trading hours. ETNs can be traded through a brokerage account.
- Require the issuer to redeem (buy back) the ETNs for a cash payment equal to the applicable Indicative Value (subject to minimum size requirements).
- Hold the ETNs until maturity and realize a return (or loss) on investment.
In each case, the cash proceeds to be received by the investor will be subject to the performance of the underlying index (net of investor fees).
Short SellingInvestors are allowed to short an ETN on both an up-tick and a down-tick. Securities must be borrowed before they can be sold short.
Lower index tracking error
Learn More About ETN Investments >
