The fund generates income by selling barrier put options on major indices, exposing investors to losses if markets drop sharply.
The SBAR ETF delivers an 11.76% annual yield by selling barrier put options tied to the S&P 500, Nasdaq-100, and Russell 2000. Investors collect premiums as long as none of the indices fall below a 30% threshold at expiration, but face losses if breached.
Unlike traditional income sources such as dividends or bond coupons, SBAR relies on volatility harvesting and structured products. The strategy targets tail-risk premiums, which historically pay off during stable or moderately volatile markets but expose holders to extreme downturns.
The fund’s approach diverges from covered call strategies, focusing instead on crash-risk acceptance as its primary income driver. Tail-risk events, such as the 2008 financial crisis or 2020 COVID-19 crash, could trigger significant losses for investors.