TL;DR: It's a technical process, but the concept is simple: our asset manager sells some of the upside potential of the position and uses those proceeds to buy an insurance policy that protects against losses.
This is all done within the fund wrapper, making it extremely cost-effective and seamless within the overall product. The result is that you get exposure to market gains while being protected from market drops.
Details: Early on, the portion of your position equal to the principal we’ve advanced is invested in a buffered (defined-outcome) ETF linked to the S&P 500. This fund uses listed options to shape returns:
Buys protective puts → targets absorbing part of a market drop.
Sells calls → funds that protection, which creates a cap on gains.
The trade-off is simple: you give up some upside potential in exchange for a targeted cushion against losses during a specific 12-month outcome period. When a window ends, the ETF resets with new buffer and cap levels for the next period. Your protection doesn’t expire - it renews yearly. That protection resets each period and only applies if you hold for the full period.
The rest of your position - anything above the protected principal - is in uncapped S&P 500 exposure and moves one-for-one with the market, up or down.