New ETF Offers Downside Protection With Options-Based Strategy

In a market where volatility is the only constant, Day Hagan launched a new tool to help investors stay afloat. The Day Hagan Smart Buffer ETF DHSB aims to provide downside protection while maintaining growth potential. The new ETF expands the firm’s growing suite of funds, which collectively manage over $690 million in assets.

Buffer ETFs like DHSB are gaining traction among investors seeking a balance between growth potential and risk reduction. These funds offer strong downside protection through options use but at the cost of limiting upside gains. This means even in a market rally, DHSB won't fully capture the highest returns.

Also Read: GMO’s New Beyond China ETF Targets Supply Chain Shift Winners

An options-based strategy helps the ETF generate income while safeguarding against market downturns. The fund uses optimal combinations of call and put options on U.S. equity investments. By selling covered calls, DHSB collects premiums, which are then reinvested into put options or spreads to bolster downside protection. The outcome is a built-in buffer against market declines.

DHSB primarily invests in ETFs tied to U.S. equity indexes, along with a selection of individual securities from these indexes. Investors should note that DHSB carries a net expense ratio of 0.68%.

With this latest launch, Day Hagan continues expanding its portfolio for investors looking to navigate market swings with a more structured approach. Whether DHSB suits your portfolio depends on whether you prioritize downside protection over unrestricted upside potential. Either way, this ETF is a solid option in the growing demand environment for risk-managed investing.

Read Next:

• Wall Street Bounces Back: Top-Performing ETFs Of Last Week

Photo: Shutterstock