OCDB provides S&P 500 exposure with a deep downside buffer starting each October, protecting against the first 20-30% of losses over a 12-month period while capping upside gains. Built for investors who want equity participation but need significant crash protection during what's historically been a volatile market period.
How It Works
Uses a options collar strategy that resets annually each October — buying S&P 500 exposure while simultaneously purchasing deep out-of-the-money puts and selling upside calls to fund the protection. The 'deep buffer' typically absorbs losses between 0% and 20-30%, meaning you take no losses until the market drops beyond that threshold. Upside is capped around 10-15% depending on volatility when the fund resets.
Key Features
- Deepest buffer protection in the defined outcome space — most competitors offer only 10-15% buffers
- October reset timing aligns with historical volatility patterns and year-end tax planning
- No protection below the buffer — if S&P drops 35%, you lose the full 5-15% beyond the buffer
Risks
- Entering mid-period means inheriting someone else's cap/buffer levels — could buy with only 5% upside left
- Zero protection beyond the buffer — a 40% crash still means 10-20% losses for holders
- Opportunity cost is severe in bull markets — missing rallies above 10-15% cap while paying ongoing fees
Who Should Own This
Best for pre-retirees or conservative investors who need equity exposure but can't stomach another 2008-style drawdown. Works as a 10-20% portfolio sleeve for those wanting to reduce overall volatility without going to bonds. Must hold for full 12-month periods starting in October to get advertised protection — mid-period buyers need to check remaining buffer/cap levels.