{"id":693,"date":"2026-09-15T07:47:00","date_gmt":"2026-09-15T14:47:00","guid":{"rendered":"https:\/\/quantcha.com\/news\/?p=693"},"modified":"2026-09-15T03:32:47","modified_gmt":"2026-09-15T10:32:47","slug":"finally-an-instrument-stack-nobody-will-use-to-bet-on-hockey","status":"publish","type":"post","link":"https:\/\/quantcha.com\/news\/finally-an-instrument-stack-nobody-will-use-to-bet-on-hockey\/","title":{"rendered":"Finally, An Instrument Stack Nobody Will Use To Bet On Hockey"},"content":{"rendered":"\n

Introducing the NHL investment products you never asked for and probably don’t want<\/em><\/p>\n\n\n\n

Three fund sponsors filed four registration statements in eleven days for exchange-traded funds that track hockey statistics. One of them is leveraged 2x. Nothing underneath them has ever traded, so nobody yet knows whether a single person wants one. Actually, I’ll go out on a limb on that one.<\/p>\n\n\n\n

In June I asked who Cboe’s S&P 500 prediction market was actually for<\/a>. A week later I asked the same question about options on prediction markets<\/a> and couldn’t find a buyer there either. At this rate I should spin the question off into its own newsletter and give this one back to the markets.<\/p>\n\n\n\n

This one actually reminds me of the NFT craze from a few years ago. It seemed silly to many people, and it’s easy to understand why in hindsight. But my view at the time was that it was more of a play by the crypto ecosystem to find absolutely anything people would be willing to buy in their world so they could generate some revenue from their infrastructure investments. There were all kinds of players in this space from exchanges to data publishers to analytics services to first-party IP licensors and more.<\/p>\n\n\n\n

I’m not here to litigate NFTs or to remotely suggest there’s anything nefarious about the NHL stack. Everyone in the chain is doing ordinary competent work, and I’ll get to why I think the underlying index is a reasonable piece of engineering. But thirty-two funds for thirty-two teams, one of them leveraged, sitting on an array of futures contracts that have never traded, is the kind of thing I’d rather notice while it’s happening than in the retrospective.<\/p>\n\n\n\n

So let’s go through it from the bottom up.<\/p>\n\n\n\n

Layer one: the index<\/h1>\n\n\n\n

Let’s start with the one deterministic thing in the stack, which is what you’d “own” (because it isn’t a team). There’s no equity in the franchise, no ownership, no claim on revenue, no cash flow. It’s a calculated index score based on performance stats.<\/p>\n\n\n\n

Every team’s index starts each season at 7,500. The score moves across 55 different statistics as games are played, and resets at the end of each year. The methodology guide’s introduction says the index “quantifies a broad range of statistical performance in a way that is independent from binary win\/loss outcomes.” In other words, it’s not even explicitly about winning.<\/p>\n\n\n\n

That’s not a criticism. That’s the stated design goal from the administrator’s own opening paragraph, and it tells you plainly what the thing is. It’s a measure of how a team played, not a measure of whether it won. If exposure to whether your team wins is what you came for, the document tries to explain it in its first few lines. And that’s reassuring for all the responsible leveraged ETF investors who never buy in without reading all the prospectuses for the ETF family, any documentation for the futures contracts they rely on, and the specification for the index the futures settle against. We’re all always doing our own research, right?<\/p>\n\n\n\n

Anyway, the weights come from what FutureSports calls “scarcity analysis”, which “identifies the relative rarity of specific statistics within the League.” Rarer events are worth more. For example, winning a game is worth a certain number of points whereas a shutout win is worth more.<\/p>\n\n\n\n

I want to be explicit that I’m not taking a position on the methodology. Building a single number that summarizes a hockey season is genuinely hard, and every answer you could pick will trigger somebody. The important thing is that FutureSports published a spec and what came out is coherent and does what it says it does. For the record, it also correlates to winning, which is probably more than a coincidence.<\/p>\n\n\n\n

Layer two: the futures<\/h1>\n\n\n\n

CME filed August 11 for permission to list futures on these indexes, with trading set to start September 28. This will enable futures traders to take a variety of positions on any given team’s index at various terms.<\/p>\n\n\n\n

One interesting note here is that CME didn’t self-certify, which is the ordinary path and needs only a filing the business day before listing. Instead, it asked the Commission to approve under a rule that runs a 45-day clock expiring around September 25. Under that same rule the product is deemed approved when the clock runs out unless the Commission objects. The default outcome is approval by silence.<\/p>\n\n\n\n

Then there’s the sentence the administrator put in its own document, under a heading reading Index Structure, Non-Investability, and Liquidity Considerations:<\/p>\n\n\n\n

There is no underlying cash market directly corresponding to the Indexes.<\/em><\/p>\n\n\n\n

That one matters for anyone who ever trades one of these. A market maker quoting a normal futures contract hedges it in the underlying. Here there isn’t really an underlying. The nearest thing available is a sports betting\u2014I mean event contract\u2014venue like Kalshi, where you can take a position on whether a team wins. Which would be a perfectly good hedge, except for that sentence a few paragraphs up where the administrator explains that the index is independent from win\/loss outcomes. The obvious hedge doesn’t work, and it doesn’t work by design.<\/p>\n\n\n\n

Layer three: the funds<\/h1>\n\n\n\n

Volatility Shares filed August 14, Roundhill on August 21, and Hillman Capital twice on August 25, once standard and once leveraged 2x. These ETFs will hold a combination of team futures and Treasurys.<\/p>\n\n\n\n

The fee is the number you’d normally pin down before buying. Unfortunately, every filing leaves it blank as far as I’ve found. The sponsor’s own precedent is 2.75% on its existing 2x Bitcoin fund, so let’s use $275 a year on a $10,000 position.<\/p>\n\n\n\n

Hold that against what’s in the box. The only part of one of these funds that earns a predictable return is the collateral sitting in Treasury bills. At current front-end yields a fully collateralized $10,000 position earns somewhere around $375. The fee takes most of it before the hockey even starts, and it doesn’t care which team you picked. Best in the league, worst in the league, same $275.<\/p>\n\n\n\n

This is all pretty typical and doesn’t disadvantage the investor buying the fund. The one catch is that you’re not exactly exposed to the index, but rather to the basket of futures. And those futures aren’t about the current spot but rather a blended take on the future value. In other words, a team could win, its index could rise, but the futures could crash because a key player gets injured and the fund falls with it.<\/p>\n\n\n\n

Another interesting example happens with the offseason when there are no games (and therefore no index movement). Since the funds need to maintain their futures exposure, the prices “may still fluctuate based on market expectations” and the funds “may experience losses during the offseason if market sentiment regarding the team’s upcoming season deteriorates.”<\/p>\n\n\n\n

There’s one more critical wrinkle to consider when it comes to these sentiment-driven instruments: they don’t actually track the index until you approach the end of the season. Before then, the pricing would be based on what the market’s expectation is for each team, and that means that you wouldn’t be able to actually buy into a contender like last year’s preseason Carolina Hurricanes at 7,500, but rather closer to 9,200. So when they won the Cup with an index around 11,500, the maximum return would not have been 53% from the 7,500 index they started at, but rather 25% from the 9,200 level they started trading at. It’s still a very good return, but would it be worth the risk of a disappointing season and a marked decline of 27% to the 6,650 average of teams that missed the playoffs?<\/p>\n\n\n\n

Note that all the numbers above are rough estimates and calculations based on the spec and aren’t exact or drawn from official sources.<\/p>\n\n\n\n

So who is this for?<\/h1>\n\n\n\n

This was the first question I asked myself when I first saw the ETFs mentioned. It was in an article complaining about how they were bringing gambling to traditional finance, and I thought they were making a good point.<\/p>\n\n\n\n

But let’s be clear: nobody is going to gamble on the NHL using these ETFs. Even the 2x leveraged ETF would only move under a percent on a typical win if it tracked the index perfectly, and maybe a couple of percent on a big one. Granted, it could move more or less depending on overall sentiment, but it’s not going to promise the kinds of returns or dopamine hits you could get from a gambling venue.<\/p>\n\n\n\n

I’m also pretty sure hedgers will not use these instruments. And I don’t just mean market making hedgers; I also mean the ecosystems that live around the teams themselves, like contract insurers, municipalities, sponsors, etc. The economics just don’t make sense.<\/p>\n\n\n\n

I probably don’t have to say that institutional managers won’t use this stack, but I do like the idea of pitching a sector rotation out of power plants and into power plays. Out of blue chips and into blue lines. Out of defense contractors and into defenseman contracts.<\/p>\n\n\n\n

I don’t see much opportunity for options traders. There just isn’t enough expected volume or volatility here, and there are thirty-two parallel families as well as futures and multiple ETFs.<\/p>\n\n\n\n

This really just leaves the occasional superfan retail investor. Someone who loves the idea of opening their account and seeing the list of teams they’ve bought. Probably next to their NFTs.<\/p>\n\n\n\n

The final whistle<\/h1>\n\n\n\n

Similar to some other questionable instruments, I think this whole stack is an exercise in finding a way to put infrastructure investments to work. I don’t see any real customers and don’t know where the demand is.<\/p>\n\n\n\n

What’s striking is that every party in the chain did its job properly. There’s an exclusive league data agreement, an independent administrator with published governance, a listing application at the largest derivatives exchange in the world filed for affirmative approval rather than self-certified, central clearing, and registration statements that would drop these into ordinary brokerage and retirement accounts. Every gate reported success.<\/p>\n\n\n\n

Follow the money and you can see why. The league earns a data fee. The administrator earns licensing revenue from the exchange, the sponsors, and data subscriptions. The exchange earns transaction, clearing, and market data fees. The sponsors earn a percentage of assets, across as many chances to gather assets as there are teams. Market makers earn that wide spread. Brokers earn commissions and margin interest (side note: this is not financial advice but please don’t buy NHL ETFs on margin). All ordinary business, conducted normally, and I don’t think anyone involved has behaved badly.<\/p>\n\n\n\n

But the holder is the only party whose economics are fully determined in advance, and if I’m honest about what the index looks like from the outside, it reads less like something the market was missing and more like a foundation you can build a lot of products on top of. I’m not going to ask if you’d invest in any of these. I’m not even going to ask if you know anyone who would invest in any of these. But if you do know someone who knows someone who might invest in one of these, then please leave a comment and tag them.<\/p>\n","protected":false},"excerpt":{"rendered":"

Introducing the NHL investment products you never asked for and probably don’t want Three fund sponsors filed four registration statements in eleven days for exchange-traded funds that track hockey statistics. One of them is leveraged 2x. Nothing underneath them has ever traded, so nobody yet knows whether a single person wants one. Actually, I’ll go … Continue reading “Finally, An Instrument Stack Nobody Will Use To Bet On Hockey”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":694,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[],"_links":{"self":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts\/693"}],"collection":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/comments?post=693"}],"version-history":[{"count":1,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts\/693\/revisions"}],"predecessor-version":[{"id":695,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts\/693\/revisions\/695"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/media\/694"}],"wp:attachment":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/media?parent=693"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/categories?post=693"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/tags?post=693"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}