How does Boxx ETF work?

BOXX's portfolio consists almost entirely of S&P 500 option contracts. The BOXX ETF uses an option strategy called a box spread to capture the risk-free rate of the market. I'll include my own simple explanation of how a box spread works, but for a more in-depth explanation, you can see Alpha Architect's explanation here and Investopedia's here.

What is a box spread ETF?

The idea behind the ETF is simple– it uses a simple options strategy called box spreads to earn the rate of return on cash, but tax-deferred. While it may sound unimportant, this fund is a game changer for investors' ability to keep their after-tax wealth ahead of inflation.

What is a box spread?

A box spread is an options trading strategy that combines buying a bull call spread with buying a bear put spread, both using the same strike price and expiration date. It's essentially creating a defined risk, defined reward range for your investment. Here's a breakdown of the components in box spread: