My Exclusive QQQY Interview with Defiance CEO!
Summary
TLDRSylvia 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
📌 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.
🔍 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.
📈 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.
🤔 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.
🔄 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.
💡 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.
🚀 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.
🌟 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.
Mindmap
Keywords
💡Defiance ETFs
💡Thematic ETF Products
💡Income-Generating ETFs
💡Options Trading
💡NAV (Net Asset Value)
💡Reinvestment
💡Market Volatility
💡Portfolio Management
💡ETF Launch
💡Investment Strategy
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
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