Zega Financial CEO on Actively Managed ETF (ULTY)

Let's talk a little bit about the yields on these products because you say yield and people think bond yields which move around but not that much. Then you take a look at some of the indicated yields on these products. They move around quite a bit to put it mildly. So maybe I know we just had Eric go through it. But how exactly does this work? Yeah, Katie, it's great to be here. So the way that this strategy works is it aims to find those stocks that have high volatility in their options. We get long the stock and then sell options 5 to 10% out of the money with short dated options. That might be a week, it might be two weeks out. And the goal here is really to convert that high volatility. Into option premium that then gets distributed on a monthly basis as you just mentioned the first two distributions because it is a fairly new fund have exceeded the annual distribution rate of 100%. It's one of those things that you know you're looking to convert that option premium that elevated option level into into a distribution And without you know the obviously you know nobody knew the new, nobody knew the news that was going to come out about GameStop that was a position we put on Monday of last week. But sometimes those positions go on the money they get called away. Next week we rebuild the portfolio. So it is a fairly active portfolio and again re screening for stocks that have you know higher levels of volatility. Now Eric you did point out that there's some concentration here in crypto and some cannabis, but the portfolio does go through, you know a little bit of diversification screening, right, you know 2025% any given sector is really where we put the limit on this. So what you can have some. You know, diversification in the fund, it's really more about the volatility than anything else and how much premium we're generating in the options market. So you said next week we might rebuild the portfolio. How often do you rebuild this portfolio? I mean is this something that could change daily? You know, generally it's, it's a weekly review of the positions that are in there because we're selling weekly options, right. Again, the goal is to harvest that weekly premium decay that you get from selling. Well, it'll cover calls. So unless those options, you know, declined in their time value really quickly, probably going to hold the positions through the end of the week. So we reassess on a pretty regular basis. I would say since the launch of the fund 2 1/2 months ago, there's been a fairly stable list of tickers in there. Probably half of them have been in there the whole time. GameStop has been in a few times. It just happened to be in, you know, met our screening rules last week. So it was in, but you know, it does go through a fair bit of rotation.