DLMY provides partial downside protection against S&P 500 losses while capturing upside to a predetermined cap over a one-year period starting each May. The fund uses options to create asymmetric return profiles that reset annually.
How It Works
The fund holds FLEX options on the S&P 500 to create a defined outcome period from May to May. It typically protects against the first 10-15% of market losses while allowing participation in gains up to a cap (often 15-20%). The exact buffer and cap levels are set at each annual reset based on option pricing. Between resets, the remaining buffer and cap fluctuate with market moves and time decay.
Key Features
- Dual buffer structure may protect both moderate downturns and extreme crashes differently
- Annual May reset provides predictable entry points with fresh buffer/cap terms
- Uses FLEX options for precise outcome targeting vs standard listed options
Risks
- Losses beyond the buffer (e.g., -25% market = -10-15% fund loss) hit dollar-for-dollar
- Cap limits upside even in strong rallies — missing gains above ~15-20% annually
- Mid-period buyers face reduced buffer protection and lower remaining cap potential
Who Should Own This
Best for investors approaching retirement or with specific one-year liquidity needs who want equity exposure but can't stomach full drawdowns. Works as a bond alternative in low-yield environments or as a 10-20% portfolio sleeve for reducing overall volatility. Requires active monitoring to ensure buffer alignment with risk tolerance at entry.