DDSQ provides 5% downside protection in both directions from the S&P 500's starting level each quarter, while capping upside gains. It's designed for investors who want some market participation but are willing to trade unlimited upside for a cushion against the first 5% of losses.
How It Works
The fund uses a quarterly options package on SPY to create dual-sided protection — if the S&P 500 drops up to 5%, you're protected; if it rises, you participate up to a predetermined cap (typically 10-15% depending on volatility when the options are struck). The buffer resets every three months, with new strike prices and caps based on market conditions at reset.
Key Features
- Dual 5% buffer protects against modest moves in either direction from quarterly starting point
- Shorter 3-month outcome periods vs annual resets mean more frequent cap/buffer adjustments
- No expense ratio suggests costs are embedded in the options spreads rather than explicit fees
Risks
- Losses beyond 5% are unprotected — in a 20% drawdown, you still lose 15%
- Upside caps reset quarterly and can be quite low (8-12%) in high volatility environments
- Buying mid-period means inheriting someone else's buffer level and cap, not starting fresh
Who Should Own This
Best for nervous investors who check their accounts frequently and hate seeing red, even small amounts. The quarterly reset makes this more suitable for tactical allocations or shorter-term hedging than buy-and-hold core positions. Consider this if you're reducing equity exposure but don't want to go fully to cash.