My Exclusive QQQY Interview with Defiance CEO!

Summary

Sylvia Jablonsky, CEO and CIO of Defiance ETFs, discusses the company's unique approach to thematic ETF products that focus on innovations and technology. She highlights Defiance's strategy of selling short-term options to generate income and details the performance of their ETFs, such as QQQ and JY. Jablonsky emphasizes the importance of reinvesting dividends for optimal returns and shares insights on portfolio management, especially for retirees seeking income through alternative investments.

Takeaways

• 🌟 Sylvia Jablonsky is the CEO and CIO of Defiance ETFs, with a background in derivatives trading and experience at Direxion, the leveraged/inverse ETF company.
• 🚀 Defiance ETFs was founded in 2018 with the goal of launching thematic ETF products representing innovations and technology, targeting younger generations' investment interests.
• 💡 Defiance focuses on cost efficiency, aiming to be the least expensive in their thematic spaces, and offers thematic innovation and disruptive technology for the masses.
• 💰 The company has expanded its offerings to include ETFs that generate income through creative ways, partnering with firms like ZGA Financial and Title.
• 📈 The basic strategy of QQQ and JY involves selling slightly in-the-money puts daily, which settle to cash, generating a premium paid out to investors monthly.
• 📊 In a flat or sideways market, the strategy can yield high percentages in distributions, while in an upward market, it captures some upside but caps the gains due to the strike price.
• 📉 On the downside, the strategy tends to perform better as the put income offsets losses in the underlying index, making it suitable for investors looking for income rather than pure equity exposure.
• 🔄 Reinvesting the dividends from these ETFs is crucial for optimal performance, as it allows investors to benefit from the compounding effect and mitigate the impact of NAV fluctuations.
• 🔄 The company has learned that retail investor interest and discussions about their products have been beneficial, and that the total return, including dividends, is a more accurate reflection of the fund's performance.
• 🔄 Defiance ETFs are suitable for investors looking to diversify their income sources and are open to exploring alternative investments beyond traditional equity and bond portfolios.

Q & A

What is Sylvia Jablonsky's role at Defiance ETFs?

Sylvia Jablonsky is the CEO and CIO of Defiance ETFs.

How does Defiance ETFs differentiate from traditional financial products?

Defiance ETFs differentiates by launching thematic ETF products that represent innovations and technology, targeting younger generations with a focus on thematic innovation and disruptive technology for the masses.

What was the initial strategy behind the launch of Defiance ETFs?

The initial strategy was to offer products that were cost-efficient and provided access to innovative technologies like 5G, Quantum Computing, and Hydrogen ETFs, aiming to cater to a different demographic than traditional financial products.

How does the QQQ ETF generate income for investors?

The QQQ ETF generates income by selling slightly in-the-money puts daily, which settle to cash within a short period, and then distributes the collected premium to investors at the end of the month.

What is the basic strategy behind the QQQ ETF?

The basic strategy involves selling daily zero DTE options (slightly in-the-money puts) to collect a premium, which is then paid out to investors monthly, while also benefiting from any upside in the index itself.

How does market volatility affect the performance of the QQQ ETF?

During times of high market volatility, the QQQ ETF can generate more premium from selling options, which can offset potential losses in the underlying index. Conversely, in flat or sideways markets, the premium collected daily can result in high distribution rates.

What is the significance of reinvesting dividends in the context of the QQQ ETF?

Reinvesting dividends is key to enhancing the performance of the QQQ ETF, as it allows investors to consistently buy shares at a lower price, leading to a better overall return on investment.

How does the performance of the QQQ ETF compare to the NASDAQ?

While the QQQ ETF aims to provide income and steady index performance, it is not designed to directly compare or compete with the NASDAQ. The QQQ's goal is to provide outsized income rather than pure equity risk exposure.

What is the role of the adviser in managing the QQQ ETF during market downturns?

The adviser has the discretion to manage the options strategy within the fund, but they are not bound to specific strike prices. They aim to capture the highest amount of premium daily, but the fund's performance is still subject to market risks.

What is the impact of market conditions on the premium generated by the QQQ ETF?

Market conditions significantly affect the premium generated. For instance, during periods of increased fear or market downturns, the premium can spike, offsetting some losses in the underlying index. Conversely, during holidays or low volatility periods, premium generation may be slim.

Outlines

00:00

📌 Introduction and Background of Defiance ETFs

Sylvia Jablonsky, CEO and CIO of Defiance ETFs, discusses the company's founding in 2018 with a focus on thematic ETF products representing innovation and technology. The goal was to offer a different kind of tech exposure than traditional financial products, targeting younger generations. Defiance aims to provide cost-efficient thematic innovation and disruptive technology ETFs, with a strategy that includes generating income through option strategies applied to broad-based industries.

05:02

🔍 Backtesting and Research for QQQ and JY Launch

The discussion delves into the backtesting and research conducted before launching QQQ and JY ETFs. Sylvia clarifies that due to the novelty of one-day options, backtests cannot span more than a year and a half. The strategy involves selling slightly in-the-money puts daily, generating a premium, and adjusting the strategy based on market conditions. The ETFs aim to provide high distribution types of income and simulate equity performance with the market risk factored in.

10:03

📈 QQQ ETF Strategy and Market Performance

The basic strategy of the QQQ ETF is explained, which involves selling slightly in-the-money puts daily that settle to cash within a short period. The fund gathers performance through the premium from the options and the index itself. The strategy performs well in flat or sideways markets and offers downside protection. However, it caps upside potential in rising markets but aims to provide outsized income and steady index performance, positioning itself as an alternative income source rather than pure equity risk exposure.

15:05

🤔 Investor Expectations and Market Dynamics

The conversation addresses investor expectations and the dynamic nature of the market. Sylvia explains that while the fund aims to distribute income made from option positions, the actual performance will depend on market conditions. The fund may perform better in volatile markets due to higher option premiums. However, the unpredictability of market pricing during quick crashes is acknowledged. The importance of reinvesting dividends to enhance the investment experience is emphasized.

20:07

🔄 Portfolio Management and Reinvestment

The importance of reinvesting dividends for optimal performance is highlighted. Sylvia discusses the impact of reinvesting on the investor's experience and the potential benefits. The performance of the QQQ ETF is analyzed, noting the price per share and the effect of dividend dates on the net asset value (NAV). The discussion also touches on the potential for future price stabilization and the unknowns inherent in dynamic strategies.

25:08

💡 Diversification and Alternative Investments

Sylvia shares insights on incorporating alternative investments into a portfolio, emphasizing that the allocation depends on the investor's preferences and risk tolerance. She suggests that for retirees, a portion of the income allocation could be placed in these types of strategies. The importance of diversification across different ETFs and strategies is noted, along with the potential benefits of reinvesting dividends to achieve desired returns.

30:10

🚀 New Product Launches and Market Opportunities

Defiance's recent launch of new ETFs, including SPYT and TRES, is discussed. SPYT offers a blend of S&P 500 exposure with a capped upside and additional income through options strategies. TRES focuses on fixed income, capitalizing on mispricing in bond ETF options. The strategy aims to provide a stable NAV with a targeted 20% return and additional upside capture. The potential for future filings and expansion into various trading opportunities is also mentioned.

35:11

🌟 Conclusion and Future Outlook

The conversation concludes with Sylvia expressing appreciation for the discussion and the value it provides to Defiance ETFs. She is open to future discussions, particularly after a year of live performance, to recap and analyze the progress and strategies of the company's products.

Keywords

💡Defiance ETFs

Defiance ETFs refers to the Exchange Traded Funds (ETFs) managed by Defiance, a company led by Sylvia Jablonsky, who is the CEO and CIO. These ETFs focus on thematic investment products that represent innovations and technology, targeting a younger demographic and aiming to provide cost-efficient investment options in areas like 5G, Quantum Computing, and ESG through thematic strategies.

💡Thematic ETF Products

Thematic ETF products are investment funds that focus on specific themes or trends, such as technology, sustainability, or healthcare. These products allow investors to gain exposure to a particular industry or innovation without having to pick individual stocks, aiming to capture the growth potential associated with these themes.

💡Income-Generating ETFs

Income-Generating ETFs are designed to produce regular income for investors, often through strategies like option writing or high dividend yields. These ETFs aim to provide a steady stream of income in addition to potential capital appreciation.

💡Options Trading

Options trading involves buying and selling contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a set price before a certain date. This strategy is used in ETFs like QQQ and JY to generate income through the collection of premiums from selling options.

💡NAV (Net Asset Value)

Net Asset Value (NAV) is the per-share value of an ETF, calculated by subtracting liabilities from total assets. It represents the market value of the securities owned by the fund, divided by the number of shares outstanding. Investors often look at NAV to determine the fair market value of an ETF share.

💡Reinvestment

Reinvestment is the process of using income or dividends to buy additional shares or units of an investment, thereby increasing the investor's holdings and potentially boosting future income and growth. It is a key strategy for investors seeking to grow their portfolios over time.

💡Market Volatility

Market volatility refers to the rapid and frequent fluctuations in the price of a security or market. High volatility indicates a market with significant price swings, which can present opportunities for options trading strategies that capitalize on these changes.

💡Portfolio Management

Portfolio management involves the selection, monitoring, and adjustment of investments to achieve a client's financial goals. It includes strategic decisions about asset allocation, risk management, and the selection of specific securities or investment products.

💡ETF Launch

An ETF launch refers to the introduction of a new Exchange Traded Fund to the market. This process involves regulatory approval, marketing, and the establishment of the fund's investment strategy and objectives.

💡Investment Strategy

An investment strategy is a well-defined plan that guides an investor's decisions on the types of assets to buy, when to buy them, and when to sell. It is designed to help investors achieve their financial goals while managing risk.

Highlights

Sylvia Jablonsky, CEO and CIO of Defiance ETFs, discusses the company's focus on thematic ETF products representing innovations and technology.

Defiance ETFs aim to provide a different kind of tech exposure compared to traditional financial products, targeting younger generations' investment preferences.

The company was founded in 2018 with the goal of offering cost-efficient thematic innovation and disruptive technology ETFs.

Defiance ETFs partner with ZGA Financial to create products that generate high levels of income through creative option strategies.

The basic strategy of QQQ involves selling slightly in-the-money puts daily, which settle to cash and generate a premium paid out to investors monthly.

The performance of QQQ is influenced by both the index performance and the extrinsic value gained from selling puts, aiming for a balance between income and equity performance.

Defiance ETFs have seen significant growth in assets under management, going from $0 to nearly $600 million in four months.

The company has learned that reinvesting the dividends from their products is crucial for investors to achieve the best performance.

Defiance ETFs have expanded their product offerings to include strategies targeting higher income and synthetic exposure to broad-based industries.

The name 'Defiance' is inspired by the movie, symbolizing a heroic and rich history within the company.

The company's research and backtesting for their strategies involve simulating the collection of option premiums and the impact on the ETF's net asset value (NAV).

Investors should consider the total return, including both equity returns and cash components, when evaluating the performance of these ETFs.

Defiance ETFs provide an alternative income strategy for investors, particularly retirees, looking for steady income streams in addition to traditional equity and bond investments.

The company is open to exploring new strategies and products, such as those involving weekly distributions or different option strategies, to meet investor needs.

Sylvia Jablonsky emphasizes the importance of investor education and understanding of the products, highlighting the value of platforms like this interview for investor awareness.

Defiance ETFs' approach to generating income through options strategies is designed to provide outsized income while tracking the performance of the underlying index.

The company's innovative ETFs, like QQQ and JY, offer investors a unique way to generate income through the use of options on major indices like NASDAQ and the S&P 500.

Transcripts

thank you syvia for taking time out of

your day to um uh join the channel join

this interview and then uh the goal is

just to you know learn a little bit more

about what you guys do and uh because

I've got people in my Discord Community

um that are investing with QQQ and iwm

and and um they've experienced some good

success and um just opportunity for them

and others to learn more about what you

guys offer and how it's different than

you know some of those mainstream

Financial products that are out there

awesome well I'm glad to be here and

happy to talk about all of that and I'm

glad that uh I'm glad that there's some

conversation behind our backs going on

about these always good to hear that you

know when you launch something that

people are talking about it's a good

thing so so why don't you first off just

kind of jump in and kind of uh introduce

yourself and kind of uh what your role

is with the with uh Defiance and just

kind of maybe just a little bit of a

background of what what um you guys

offer and how it's different than you

know most Financial products out there

sure so um def so I'm Sylvia jablonsky

and I'm the CEO and CIO of defiance ETFs

and just some quick history my I I kind

of grew up like on a swap Delta 1 Equity

derivatives trading trading desk sales

trading desk and ended up working for um

direction for for about a decade which

was the lever inverse SK the ETF company

where um I met my founder of of our

company and and you know Co co-partner

Matt bski um and and Defiance was

started in

2018 uh the the company was pretty much

started with the idea that you know we

would launch products that represent um

thematic ETF products that represent

Innovations and technology and our

initial view was that you know

everything from kind of like younger Gen

X to Millennials to gen Z to Beyond you

know it's not going to kind of be your

your grandma and grandpa's portfolio

right where they might have XYZ mutual

funds you know select stock sector

exposure things like this and we just

thought like they you know if they had

access to Tech before they're going to

want a different kind of tech and what

is that well without for defiance's 5G

and Quantum Computing if they want um

access to oil energy and gas or ESG well

for us that's a hydrogen ETF right so we

kind of build these products that are

that are built around Innovation and

then we also try to make them super

coste efficient I won't say cheap

because that's subjective to everyone

but in in the spaces that we launch our

products we are the least expensive when

it comes to thematics right so um so you

know um thematic Innovation disruptive

technology for the masses is what we

started with and now you know we've kind

of since 's been this huge kind of trend

and interest for products that pay out

income basically or generate high levels

of income in creative ways Beyond just

you know picking the best div payers

right and so we partner with zga

financial and that I know we're going to

talk about that a little bit more and

and um also title and we came up with

these um these ETFs that essentially

represent broad-based Industries but

they give you some juice through the use

of option strategies and so uh we have

about five of those products now and

then um you know a handful of the static

ETF products so that's that's who we are

uh at the moment and fun fact the name

of our company is is um after the movie

Defiance um so it's a it's a kind of you

know heroic and Rich history with within

our firm um and yeah so that's who we

are I um I remember way back a few

months ago I did a a big video on on QQ

y I was just very fascinated by the idea

really nothing had been launched like

that before yeah and I you know did some

of my own like well here's how I think

they might run the strategy you know

with my own basic research and tools but

what I'm curious to know is as you were

getting ready to launch uh QQQ and uh JY

what were some of the what types of back

testing and research did you do prior to

deciding to launch them what what did

you see that said hey this is something

that you know is you know good income

right now but we think it's a viable

strategy moving forward on a recurring

basis into the future yeah sure and so

um I I don't know if a lot of people

know about this but these these kind of

like one day options and you know zero

day to disc to to expiration types of

option products there are or options

listings are are very new so you know

back tests like anyone who's telling you

they have a back test that goes back 10

years I don't know it's only been around

for a year and a half right so right um

so our back T should be you know

completely um you know kind of like

blunt on it I mean we could simulate

what it would look like to to have sold

puts that are a day from XPR and things

like that for a long period of time but

the back test is really taking the index

performance and then um you know looking

at these options and the type of Premium

that we were able to gather on a daily

basis and um because it's an actively

managed strategy I think it's um you

know again it's like hard to to get a

relevant you know 10 year long track

hisory track rate or something like this

it's just that we have um a Trader who

has expertise in trades these options

every single day and knows that you know

kind of like back testing since

Inception that he was seeing that on a

daily basis you could sell these

slightly in the money options um at the

money puts whatever it might be um

slightly in the money puts slightly add

the Mone puts um and gather 25 bips to

about 1% on a daily basis and so we

started kind of tracking that and seeing

that you know oh you can you know you

get these high percentage types of

distributions doing this each day and

then you know just in terms of

simulating the equity part of it you can

go back obviously just run a historical

back test on P NASDAQ Russell that is

the market risk that you have right

because you are investing in in those um

indices as well yeah and so since we're

talking about it why don't we just kind

of for those that aren't familiar with

it or maybe you you haven't seen my

video you know what would be what's the

basic strategy we'll talk we'll talk

about just QQ what's the basic strategy

and how is that implemented generally

yeah so every single day um at the close

essentially we are selling slightly in

the money puts and they settle to cash

within you know 23 hours and 59 minutes

call it um so they're they're you know

kind of very shortterm daily zero data

xre um options based on the amount of

hours that they're held and they

generate um a premium and so each day

that premium is collected and then at

the end of the month we pay that out to

investors now the funds essentially

gather performance in two ways so one

way is selling the actual put uh the

second Way That We Gather performances

is obviously the index itself right so

extrinsic value selling the put and the

intrinsic value is you know any kind of

upside that you get between the value of

the index and then the strike of the

particular option that you're holding so

you know if you think about like when

will it work and when you know kind of

like how does it do well so if you had

you know kind of like a perfectly flat

or sideways Market that barely moved and

you just collected the premium every day

you could have these high premiums like

60% or so right is is qqy if you didn't

factor in the index movement right um if

you if the index moves upward you're

going to capture some of the upside but

you'll never capture these like

parabolic moves that we've seen in the

last couple of days right so um because

you're CA to a strike right so um so the

your upside cap to that um but then on

the downside you tend to perform better

because you know as NASDAQ is falling we

will experience that performance too but

then you know you add in the put income

that you got that day so it's kind of

like will outperforming down markets you

know best case scenario kind of um you

know kind of like sideways flat markets

and and obviously upside you will do

really really well and and gain

performance but in terms of a lot of

times people will kind of try to compare

us to like the NASDAQ itself that's not

really what we're after we're we're

trying to um you know the goal is the

income right the outsized income and

then you know kind of like steady index

performance yeah so it's not really fair

to say well how did I compare against

the NASDAQ necessarily because somebody

who's been investing in in QQQ or or ndx

is not is is trying to achieve a

different objective entirely right they

want Equity exp they want pure Equity

risk exposure right they don't want like

right I I often say you know like if

you're looking if you're looking for you

know if you want access to like apple

Tesla meta you know what whatever it may

be like this isn't this isn't it right

this this is if you want income it's

almost like um you know on any of the

indices really on the S&P 500 on this

this tends to go to the you know when we

talk about kind of to like the

professional portfolio managers just in

terms of how they think about it the

asset allocators they stick it in their

alternative income sleep so it's right

there next to like MLPs the div paying

stocks you know they're kind of like

fully aware that that's not Equity risk

exposure so um in an up Market you you

get extra credit per se right because

you're in the money a little bit on your

put options so you get extra premium and

that all falls off at the end of the day

the next day and if it's a flat Market

that's ideal gener

so I mean in a market that we because we

haven't seen it yet in the 3 to six

months now uh since since you guys

launched These funds we haven't seen a a

a consistent downturn in the market

right we've seen certain days where you

know we see a large downturn in the

market um greater than the amount of

Premium you would generate and which

results in in in a decrease in the in

the price

of which is normal um what um do you

guys anticipate since I mean based on my

understanding of the prospectus it

sounds like you'll generally sell at the

money to in the money so yeah is there

any freedom or discretion that the

adviser has to

um allow let's say in a in a market

where we see a drop over a month or two

consistent days down uh in yeah in in um

in ndx or or the underlying index that

you buy or sell the options on is there

freedom to say hey let's let's move to

some out of the money strikes here or or

is it just a matter of hey we're just

going to stick with at the money and if

we need to we're just going

to distribute Capital even if it results

in a return of of capital as opposed to

actual option premium yeah I I think so

we will always distribute the income

that we make in the fund right um so we

have to make the we have to earn the

income by selling the actual options

position in terms of you know we don't

have any kind of like hedge built into

it um in terms of you know maybe

changing the strategy on you know there

are there is some Freedom obviously

within the options market like if you

look at the perspectives it says we

could use sort of um uh you know the

short term the the day the zero Daya exp

option all the way through a week right

so there's some flexibility there in

terms of like which option we would use

and we're not bound to like it has to be

you know a like a 30 Delta or it has to

be this it has to be that whatever it

might be like it's just it's offici to

tr try try to capture the highest amount

of Premium that we can on a daily basis

and so every day we would do that sort

of no matter what but in terms of

because we do get this question a lot

like what happens if the if NASDAQ stops

starts to crash I mean we're in the same

boat as you know Q's in that case like

it would also crash that's you know full

disclosure um you know you get all the

benefits of being long the index and all

the you know all the risks too right and

the reality is and and we we tend to

forget this as investors since we're

emotional people when are going down

volatility is up the vix is going to be

up and that's going you're going get

good options premium exactly you're

going to get outsized because fear is

always bigger than greed so we're going

to see a a massive spike in the amount

of Premium you guys can generate as well

that's going to offset some of those um

the losses in the underlying index yeah

and that would be the expectation but

you know I wouldn't ever want to kind of

like promote it that that's exactly what

would happen because it's you know the

truth is like when you do have these um

quick crashes you don't know how

efficient the the markets pricing and

things like that so that's you know

that's always kind of a caveat that I

throw in there but yeah I mean if

markets are more volatile like you can

see it now right every time that um fed

Shar speaks we we gain more premium like

for sure we gain more premium that day

right and then around the holidays

Christmas Hanukkah you know Thanksgiving

I mean there's like slim picking some

premium because nobody you know so

because there's nothing going on in the

market right there's no volatility

things like this so all of that Still

Remains true so we've been live now with

QQ qy and Jey I think or JPY I have to

whenever I say jeppy I have to say JY

otherwise people think J um so it's

nearly been six months um yeah what have

you guys learned so far how has reality

been different than what you expected if

it has yeah yeah and that's a great

question so I would say the number one

thing that we've learned and and this is

a credit to you know people people like

yourself who are out there actually um

talking to investors about how products

work and kind of like the upsides

downsides and how to think about things

but um

it's it's been really helpful to um so

so this is actually great too because a

medium like this like I I think a couple

years ago like it just wasn't um as

available right so as an ETF provider

the feedback that you get is from the

portfolio manager and that's often

someone at a huge hedge fund or an

institution and things like that and so

um you don't always get kind of like the

feedback from retail and I think as you

know all of these mediums have changed

it's been so helpful and so what we've

learned for the first time really

because there has been so much retail

interest in our product and there's been

so much you know kind of coverage of

that and discussion about the product we

have learned that one well one of the

the best way so two things one when you

look at the performance of this fund you

have to calculate both the equity return

and the cash component or the total

return right to see your per to per to

actually get the actual performance of

the fund that's number one but number

two is that reinvesting is so key with

these products you know if if investors

are just kind of looking to take the

entire distribution that's fine but it

just won't perform as well as if they

put it back into the fund or or put it

somewhere else even right just put it in

the market somewhere like you want you

want that cash to work for you um so I

think that's one thing that we learned

that like not um a lot of kind of

investors didn't realize the impact or

like the benefit of reinvesting the

dividend like what a difference it makes

in in the in the experience that you

have all right so what we're looking at

here is just a um the max price chart

here of QQQ and for everyone's awareness

this is not total return this is price

per share yeah exactly and and and Yahoo

doesn't actually show it that way so

it's difficult to get your um yeah found

that's tough that's really tough they

will show it if you if you add a

comparison so if you were to bring up

the full screen and you say to this then

they'll give you a difference in

performance but but yeah so we're

looking at just price per share so you

have to have full context there but as

we look at this chart here this to be

fair this is very common with with newly

launched ETFs right we saw it with Q

back in 2014 anything that's new there's

a little bit of of settling of the price

that can occur so my question to you is

as we've seen this here these these dips

here that occur this drop here this

always happens on the X dividend date

the dividend date yeah right which is

which is what you generally will see as

well with other in dividend stocks and

ETFs though there's other market

conditions that are playing on those

Investments where you might not it might

not be as pronounced on the chart but on

these drops here and then when we we see

this slowly building back up and then we

hit the ex dividend date and then up and

then down and it's been pretty

consistent so my question to you is um

we haven't seen it really consistently

get back to its previous price it

continues to go down do we think do you

think that can you attribute that to

maybe just that the um that the I'll

throw it out there that there's not as

much sustainability than you thought in

the price per share um for this

investment given what you're trying to

accomplish or is it more likely there's

just there's some sort of settling

that's occurring to some sort of

sustainable price per share moving

forward or do we just not know what the

future holds given that the strategy is

so

Dynamic yeah I think you know I think

it's the ladder I think that you know

you will get some so so two things one

if you actually run the reinvestment the

the you know the again like the value of

your investment your initial investment

versus where it is today um you know

you'd be very happy with that outcome

sort of regardless of of what's going on

with the nav and you've been kind of

consistently buying shares at a lower

price so so I think that's really how

you you almost have to um you have to

kind of like P PM along with us right

and I think reinvesting the dividend is

the is the P the the portfolio

management of of the investor to get the

best outcome and so with this with these

funds that you know we're talking about

like 50 60% annualized dividends on

QQQ um you know the average is kind of

like like high high 50s right now it's

it's a big chunk of of dividend to pay

out of the nav each month and then so I

think over time the nav should steady

and you should get that income but you

know there are prod and like to your

point like what what don't we know well

we don't know the path of the market so

it is possible that you know if we don't

have enough days where we can keep

capturing the intrinsic value it is

possible that and we go the other way it

is possible that the nav continues to

fall so there is an element of we don't

know um what we do know is that the

product is performing quite well on a

total return basis and that's really you

know that's really what we want

investors to kind of take away from it

um and then with ETFs like this like

I've gotten this question a lot before

we have a lot of our competitors have

done things like reverse stock splits

and you know um kind of nav stability

types of corporate actions when you have

these products that pay out these huge

children so there's always like you know

it's just in ETFs in general I used to

get this question a lot on lever ETFs

right because you get a 30% move on a

three beta fund it wipes out the whole

Fund in a day and oh my gosh right

that's terrible right but um a lot of

ETF insurers do have tools at their

hands to kind of like protect the

investor and protect the investment and

you know so if you get to it like if the

question is what happens if it gets to

like $2 you know there is a way to kind

of like reverse split it and you know

along the way the client has continued

to get that intrinsic value and earn

that income so the performance

is still good even if the nav is going

down um which is counterintuitive but

like again it's the chart and it's it's

so funny because we were talking about

this the other day that like anyone

who's looking at yaho um is kind of just

not you know able to see the whole

picture of the dividend

itself and it's it's a big difference

it's a really big difference yeah and if

you if you click here on performance you

do seean if you look at that chart you

think well the stock is losing money but

but the reality is yeah it's positive

year-to date one month three month

return they're positive so for the for

the average Joe investor out there who's

getting close to retirement and they're

starting to game plan retirement income

we'll just work with the assumption that

they're not working with an advisor they

want to they want to handle their own

Investments um yeah traditional

investment Theory would say well maybe

there's the 4% rule um or you know guard

rail strategy where you just own

equities maybe a combination of equities

and bonds and you um you sell a portion

of your assets over time and you can

find this rate at which you can make it

sustainable but more and more these days

right we're seeing investment options

tailored towards you know creating

income like qld back in

2014 um we've got you know jeppy and

Jeep Q from JP Morgan we've got super

unique Investments like the yield Max

Suite of ETFs um and then more recently

options Centric um ETFs like QQQ JY Etc

so my question to you is from a total

portfolio persp perspective obviously

this is not investment advice from me or

from you but right how should

investors like think of these types of

unique Investments I'll just I'll just

plug you guys in with those types of you

know alternative Investments how much of

an investment Port portfolio would you

consider putting um these types of

investments in there how much would

you um how much of your portfolio would

you allow to be part of these

alternative Investments if all of it or

or some of it where so I I think it you

know it dep it depends on the investor

so it's hard it's it's a bit difficult

to give that advice because I think as

we talked to a lot of retirees like

there are some that are just you know

they won't touch equities they're

they're they're finished with equities

and um they'll be all bonds and all

income and then so if you answer you

know if you ask it that way well then

maybe it's you know kind of a portion of

bonds and and a portion of these income

paying types of of strategies right but

I think for like you said kind of maybe

the the average Jo investor

who does have some Equity exposure you

know maybe it's not a 6040 but it's some

version you know as much as we kind of

think that that's sometimes we think

that that's dead it's really not I I

still talk to a lot of investors that

are retiring that like really do stick

to that strategy still and so if you're

40% is income or your 30 or 20% is

income I think it's reasonable to put

this in as you know kind of something

like this as like half of the exposure I

wouldn't just use one ETF but I would

use you know a few of them like pick the

ones you you sort of like that you think

are the best dividend that or tracking

the best stock or index that you want

exposure to and for you know for a

retiree that might be um Jey with a Y

because it's S&P 500 and that's less

risky than say QQQ y even though it has

a juicier dividend and iwm Y which has

an even juicer dividend it's like 70%

right so um so I think for for retiree

it's it's probably looking at the S&P

500 product sticking that in with your

your income dividend you know plays to

kind of like your comfort level um and

what's interesting about these products

because you make up a great you know you

make a really good point like there's a

lot of us out there doing some version

of this like yield Max um so they do

covered calls we we do a putri strategy

and if you look at the actual you know

risk profile of of those two things it's

it's identical um and a lot of that SEO

puts out out a lot of good information

on that too right um where you can kind

of see that like both of those

strategies have the same amount of risk

like why we thought to do this and why

we thought we could maybe earn more

income and and you know that'll that'll

play out like right now their Tesla ETF

is really not doing well but you know

something like a Nvidia crushing it

right or like a a meta or something like

that so um I think what we think and

what we believe will happen over time is

like with the perate strategy so the way

we do this is um we hold we hold

treasuries initially right and so you

get four to 5% on treasuries which a lot

of the compet like you mentioned JP

Morgan right so they hold the index and

really what they're getting is um the

dividend which might be like 1.2% we're

getting four to five so we start with

this higher income environment and then

the next thing that we do is we we you

know sell it every single day right so

we think that like having more bites at

the Apple could potentially help us

outperform some of these strategies over

time um you know but time will tell I

think the good thing though is that

almost all of them are providing really

solid income there's a lot of options

out there um and I've heard you know the

feedback that I get from a lot of our

clients is like I take 10% of the

dividend and I reinvest the best and you

reinvest the rest and that's like the

perfect recipe you know other people are

taking 25 other people are taking zero

and just reinvesting the whole thing so

I think you know people kind of have

their own recipe figured out for the

type of return that they want but um

definitely reinvesting it like over

overall reinvesting is is is the best

way and that's perfect for a retiree

right because you're not kind of trying

to get in and out of this thing and um

you want some income but you know you

don't have to really day trade products

to get it so I'm not sure if you're

aware there was a um round till

investments just recently I think

yesterday they just

launched just launched a brand new ETF

they saw you guys getting in on the Zero

DT and they said no no more people need

to get on this so they just launched it

and they're a little bit different in

that they're going to be looking to do

weekly distributions yeah um and it's

also different because your main holding

is cash but they're going to be looking

at um a um exposure um words G right now

but they're um looking at not actually

owning the index but they're going to be

holding um a a synthetic synthetic thank

you a deep in the money call option in

lie of that um which which which is

synthetic in nature and should generally

track the index I wanted to know what

your thoughts were on that um if that's

if that's even something that's even in

your purview like is that even something

we would consider down the road do you

like monthly versus weekly um I'm sure

that there's probably a lot of maybe

that's a booking keeping nightmare I'm

not sure exactly what that would I'm

just curious to know your thoughts on

that I think you know the it we have to

see how it goes right there's there's

kind of a winner and and a loser and you

know I I think that they probably they

have the best sort of recipe for apple

pie and we think we have it but um my

concern with the weekly would be that

there would be more nav Decay but that

being said I don't know that they aren't

you know kind of doing something to

buffer that so I can't really I can't

really say yet you know kind of like

what would happen there I think what

we've learned and probably what they did

which is positive for them is that they

said hey everyone's doing it monthly why

don't we try to do it weekly you know

we're all trying to find the the best um

you know the best kind kind of like

Secret Sauce here so um yeah the

products are very similar I I think you

know we'll have to see how it plays out

over time but yeah um what's what's

great about this though is that there

are more and more products coming out in

this space and so you know that gives

investors more options um and and

usually you know um makes products more

creative more efficient over time and

things like that so um we're all you

know game on we're for it but yeah I

mean I think I think it's a great idea

to try yeah yeah and the reality is we

just we just don't know yet I mean it's

five we don't know yet we don't know or

we just the data isn't available yet to

say what's sustainable what what is the

I mean it could be possible that that a

distribution rate of 50 or 60% isn't

sustainable and maybe that ends up being

something like 30 to 40% um um is

something that can be more realistic you

once we yeah I mean that's a great point

there there's so many moving yeah and

and like to the things we were just

talking about right like are there

investors going to reinvest the dividend

or are they going to take it out like

what you know I I think that yeah I mean

if if if the space gets crowded is there

less premium in the options Market I I

think all of these things are going to

play out over time um but I think you

know uh in the short term you know kind

of like what they've tested and what

we've tested is is is playing out to

these enhanced income levels could that

change over time where you see the

reduction sure like the amounts will

change because we've you know we've gone

from Z to nearly 600 million in four

months right so um when you have higher

levels of of AUM you know like you're

you're kind of you'll kind of see what

happens over time but um yeah like the

the extrinsic value is running between

50 to I don't know high like mid to high

50s to 60% on qqi 70% on iwmi and you

know um a little bit less on like maybe

you know mid- 40s on on on Jeffy over

time but we have to see we have to see

if we can keep it up and um you know and

kind of adjust from there for me

personally I do a lot of um I don't own

a lot of ETFs um I will I use or it's

for from a from an option Centric ETF

perspective um I I'll generally write my

own options um and my question to you is

to the to the investor who says I can do

better by doing it

myself what are your thoughts so I think

that some investors can absolutely do it

better I've spent a lot of time working

in a world where you know High netw

worth investors are double shorting

lever ETFs and outperforming large hedge

funds so I I don't sounds terrifying

yeah that sounds terrifying but I don't

take any credit away from um Average Joe

day trader because it's you know like

they're they're you know but I do think

that with a pro with so it's so

interesting because I think that they're

investors who can do this every day but

you know are you able to do it every day

right can you actually trade every

single day do you have the time do you

have the patience do you are you kind of

managing your own risk and you know

operating the fund right because it's

it's it's a heavy load daily I think if

you're doing monthly you know types of

trading with options is kind of just

fine but daily you know I don't know

like if you have an algorithm doing it

for you great but I think it's tough so

I think that there's a a level of like

just like ease and efficiency um our

Trader is you know kind of like a world

renown decades long of experience in in

options also a wealth manager like I

I I like to trade too right I love

trading stocks options things like this

but like I would much rather have him do

it than than me like I because he does

it every day and knows the market has a

feel for for the premiums and things

like this so there's experience behind

it um and and then you know it's a it's

an efficient rapper like it's an

efficient rapper you kind of you know

set it and forget it keep an eye on it

and um and I think it's you know so so I

would just say it's just a matter of

preference and time like I think if you

have a full-time job it's hard it's hard

to sell daily put you know it's just

hard to do it and the other tr the other

reality too is with with the scale that

you guys have um for the average Joe

investor who doesn't have the scale like

you know who's got millions of dollars

you know yeah commissions maybe yeah

there things there other factors yeah

yeah but then there's also the fact that

unless you have that extra scale that

extra cash you're going to have to

utilize spy and iwm you will and QQQ as

opposed to being able to use the big

indexes where you can worry about cash

settled versus shares and having having

things called away and there's there's

more more effort involved you have put

risk yeah you have yeah you do yes

that's that's a great point and that's

actually a highly dangerous Factor um

because I think it could you know if

you're kind of like put shares you're

it's it changes the dynamic right of the

product and then n you know like are you

n you know I I think like these are to

your point again like they're they're

cash settled you know European sell

index options right so there so there's

no kind of like naked exposure here and

um I think they're you know kind of that

would be a higher risk as well I know

that you just recently like I think in

the last two or three days you launched

something new that I didn't even realize

was there that I think like a called

yeah there's there's two more there's

two more um one is and might be the

first one to like talk about it actually

but spyt T it was just launched today

saw that I saw that here let me let me

or sorry yesterday what is today no

today's March 8th I'm I'm uh yesterday

was Thursday was launched yesterday

yesterday so um so that that ETF

essentially gives you you know and it's

it's actually to the point that you and

I were just talking about right like we

for these higher income paying funds you

want to do some level of portfolio

management and reinvestment and you know

you kind of like want to make up for the

um instability in the nav and things

like this but for the investor who wants

the more stable nav and wants you know

kind of Demands higher you know in index

performance and not just the option side

what we did here is we we we're going to

Target an annual 20% return but we're

also going to Target grabbing additional

upside um so you know you're going to

you're going to essentially like uncap a

covered call position um with with this

so it's it's essentially you know kind

of credit spreads on this to get this

but but yeah so this will be you know if

you want more S&P 500 exposure with a

more steady 20% return this is you know

kind of that product and we also

launched another one just you know a

little while ago called Tres which is a

lot like yeah and so that's on fixed

income so that's kind of like you know

there's this really interesting

mispricing of options on on ETFs like

TLT and a lot of these you know fixed

income um Bond products out there and so

we're trying to capitalize on that

mispricing by providing income through

um you know trading options on on some

of the top treasury ETFs interesting

yeah this one was interesting to me with

spyt because you know the B concern that

people have when you talk about covered

calls is well you're giving up all that

upside so it was to see here that you're

looking to and please correct me if I'm

wrong but you're gonna you work with the

traditional covered call model and yes

and to avoid any significant opportunity

cost above and beyond the covered call

you're including above that cover call a

strike I'm not sure if there's a what

the Gap is between the yeah a a longer

dated it have to be there have to be

some Gap there or some dating difference

to make sure that it was there was not

too much erosion of the income but

you're allowing yourself some run up in

the actual um price appreciation too

because you're buying an option above

your your your short strike correct yeah

exactly so you're you're getting that

income so it's the same concept of you

know we love this daily income and this

you know zero DTE 1 DTE whatever

whatever you want to call it um uh you

know so you're getting that short-term

income through you know selling the

option and then you're on capping it by

um using a longer dated option to

capture exactly what you just described

you know the upside to the the strike

that's further out and so you know if

the market rallies you're going to

you're going to participate in the

equity performance a little bit better

than you would if you're just kind of

selling a covered call or selling a

slightly in the money put or something

like this so go yeah here's the holding

here so you got your your your long

exposure to the S&P 5 500 through spy

I'm assuming this is a fund here FG

XXX yeah you have a little bit of TR

yeah yes okay and then you've got here

this is your short strike um and then

there's the Gap there's it's a 10 10

difference there 5165 to 75 here um so

there is a little bit of opportunity

cost but you're still allowing yourself

if there's significant moves up in spy

you're going to capture the majority of

that here yes exactly exactly and so

that goes to your point of like what

people kind of people investors wanting

uh a more stable nav um you know along

the way so you're you're you know you're

kind of tracking the index but then

you're also getting that you're also

getting some extra cash and so the back

test on this looks great as back tests

do but it it actually um you know when

we when we ran this out this was one

where it was like it kind of even

surprised us on um how well it had

outperformed the S&P 500 but again you

know to your point I don't want to sort

of like oversell anything because we

haven't had any kind of major pullback

um we have you know we've we've kind of

had a good run up in the market for a

while too so that data is indicative of

that as well but yeah I mean it's

performing quite well um over time and

we hope that that you know we hope to

achieve that as it's live and I'm seeing

here it looks like you have plans for

the same thing in the NASDAQ 100 and the

Russell

2000 yeah we filed for those um yeah and

you know you're gonna probably see some

can't disclose now but you'll probably

see some uh pretty cool filings from us

today um around the clothes too so yeah

we're definitely you know digging into

digging into a bunch of spaces now and

really trying to you know expand our our

footprint in in uh you know interesting

trading opportunities for investors very

interesting and then really quick here

before we go um so the is this also a

daily u a daily

option um or is this weekly I I didn't

see here yeah yes and no so like the

it's a spread so you have one leg is

daily and one is further out so oh okay

I didn't I didn't notice that because I

thought I saw daily on both here looks

like it could just be the timing of it

it's today's Friday yeah it's just put

yeah you're probably just seeing because

it just launched it's not you know um it

might have not fully updated on the on

the Holdings yet but you probably see

that after 4M tonight awesome this has

been a ton of value um was there

anything else you wanted to bring up

anything any other messages you wanted

to talk to um no I think I'm good I'm

happy you know if you have anything else

I'm happy to answer it um you know I uh

I love the questions it helps us helps

us you know learn stuff too and and it's

good to hear about how people are

thinking about the product well I would

love to maybe in the future we can talk

more about your your products and maybe

we can you know maybe once we've been in

this a year now we can do come back

together yeah do a

recap awesome well thank you so much for

your time I really appreciate it thank

you thanks for your time thanks thanks

for having me on