Innovator Equity Dual Directional 10 Buffer ETF - September (DDTS) seeks to provide defined outcome exposure to U.S. equity markets over a one-year period ending in September. This buffer ETF uses options strategies to offer 10% downside protection while allowing both upside and additional downside participation beyond the buffer zone.
How It Works
DDTS employs a sophisticated options overlay strategy using FLEX options on the SPDR S&P 500 ETF Trust. The fund purchases protective put options to create a 10% buffer against losses while selling call options to fund the protection. Unlike traditional buffer ETFs with capped upside, this dual directional approach allows unlimited upside participation and additional downside exposure beyond the 10% buffer. The outcome period resets annually each September with new option positions.
Key Features
- Dual directional design provides unlimited upside potential unlike traditional capped buffer ETFs that limit gains
- 10% downside buffer protects against first 10% of S&P 500 losses during the September outcome period
- Annual reset in September allows investors to lock in new protection levels and outcome parameters
Risks
- This ETF can lose value beyond the 10% buffer if S&P 500 declines more than 10% during the outcome period, with full downside exposure to additional losses
- Options strategies create tracking error versus direct equity exposure, potentially underperforming during strong bull markets due to options pricing inefficiencies
- Early exit before September outcome period end may result in losses even within the intended buffer zone due to options time decay
Who Should Own This
Best suited for conservative equity investors with 1-year investment horizons seeking defined downside protection with upside participation. Medium risk tolerance required as losses beyond 10% are magnified. Works as a tactical allocation (10-25% of equity exposure) for investors wanting equity exposure with some protection during uncertain market periods.