Common questions about Oaktower’s options credit-spread strategy, eligibility, returns, and risk.
An options position where you sell one option and simultaneously buy a further out-of-the-money option of the same type and expiration, collecting a net premium. The option you buy caps the maximum loss, so the risk is defined before you enter the trade.
You keep the premium collected when a spread expires out-of-the-money (worthless). Because implied volatility tends to be priced above the volatility that actually occurs, systematically selling out-of-the-money spreads aims to collect more premium over time than is paid out in losses — net of fees.
Primarily defined-risk credit spreads — put credit spreads, call credit spreads, and iron condors — sold far out-of-the-money on zero-day (0DTE) liquid index options that expire the same trading day. Actual positioning is governed by the offering documents.
0DTE means zero days to expiration — options that expire the same day they are traded. Major index options now list daily expirations, so positions can be opened and closed within a single session, leaving no overnight or gap risk on the book.
Selling low-delta, far-OTM strikes gives a high probability that each spread finishes worthless, so it lowers the odds of a loss per trade. But it is high-probability, not low-risk: the premium is small next to the capped max loss, and 0DTE gamma means a fast intraday move can produce a full loss quickly. Judge the strategy by the size of its losses, not the frequency of its wins.
Per trade, yes: the maximum loss on a credit spread is the strike width minus the premium received. But that maximum can be several times the premium, and a sharp intraday move can hit many positions at once, so the strategy as a whole can still have meaningful drawdowns.
No. It is a stated contractual rate, not a guarantee that you will be paid. Interest and principal are funded solely by the issuer’s 0DTE options trading, which can lose money. Payments can be reduced, delayed, or stopped, and you could lose your entire investment.
The note still owes its coupon, but the trading may not have earned it. A legitimate issuer pays only from genuine profits and capital, and may default rather than pay existing investors with new investors’ money — which would be a Ponzi scheme and unlawful. This mismatch between a fixed obligation and a variable engine is the central risk of the structure.
The strategy’s return shape — many small gains and occasional larger losses. Sudden market gaps and volatility spikes can push multiple positions to their maximum loss before the manager can react. Judge the strategy by its worst weeks, not its average ones.
Only verified accredited investors, as defined by the SEC. Because this is a Rule 506(c) offering, the manager must take reasonable steps to verify your accredited status before accepting a subscription.
A promissory note — a debt obligation of the issuer with a stated coupon and term, described in the note offering documents. The notes are illiquid, generally have no secondary market, may be unsecured, and are typically held to maturity.
Ask for the full track record including the worst drawdowns, position-level risk limits, how the book behaved in past volatility spikes, the fee structure, and independent administration and audit. Read the offering documents and the OCC options disclosure in full.
Still have questions? Request access and our team will follow up, or read the full risk disclosures.