Analysis

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About Nicholas Fixed Income Alternative ETF

FIAX invests in short-term US Treasurys while utilizing a defined risk option premium strategy. The fund uses vertical option spreads on ETFs and indexes across multiple asset classes. Each transaction can either be a credit spread or debit spread, where the fund simultaneously buys and writes FLEX calls and puts expiring weekly, monthly, or quarterly. In a debit spread, the fund buys an option closer to the money and sells another option further out-of-the money. In a credit spread, it does the opposite. Options premiums represent a combination of dividends and growth of underlying assets. The adviser has full discretion on the selection of options positions. Up to 10 credit spreads are used by the fund at any given time, with up to 20% exposure to a single ETF or index. The fund holds between 1% to 10% of its assets in the options portfolio and invests the rest in T-bills, cash, and cash equivalents. The fund intends to limit its use of leverage.