Buying a buffer ETF mid-period
A buffer and cap are set on the first day of the outcome period. Enter how far the index and the fund have moved since then to see what a buyer today receives.
Buying partway through
What changes when you buy mid-period
A buffer and cap are set against prices on the first day of the outcome period. Buy later, and the buffer and cap you receive depend on how far the index and the fund have moved since then.
Gray: buying on day one. Purple: buying today, at the prices above.
Hypothetical illustration of a simplified buffer held to the end of the outcome period, before fees and expenses. During the period a buffer ETF's price does not move one-for-one with the index, so use the fund's own published figures for its current remaining buffer and cap. Not the terms or performance of any fund.
How it works
Formulas. Gain left before the cap = (1 plus the cap) divided by (1 plus the fund's change since the period started), minus 1. Index drop before the buffer starts, when the index is above its start = 1 divided by (1 plus the index change), minus 1. Buffer left from today = the buffer divided by (1 plus the index change) when the index is up, or (index change plus buffer) divided by (1 plus the index change) when it is down, with zero as the floor.
Worked example. With a 10% buffer and a 12% cap, and the index up 5% and the fund up 3% since the start: about 8.7% of gain is left before the cap, the index must fall about 4.8% before the buffer begins, and about 9.5% of buffer remains from today. Hypothetical, before fees and expenses.
Assumptions. Held to the end of the outcome period. During the period a buffer ETF's price does not move one-for-one with the index, so use the fund's own published remaining buffer and cap where available.
FAQ
Frequently asked questions
Can you buy a buffer ETF in the middle of its outcome period?
Yes. Shares trade every day, but the buffer and cap you receive depend on how far the index and the fund have moved since the period started.
What is the remaining cap?
The gain left before the fund reaches its cap value at the end of the period, measured from today's price.
What is the remaining buffer?
The share of index decline from today that the buffer would still absorb by the end of the period. If the index is above its start, it must first fall back to that level before the buffer begins.
Where can I find the current figures for a fund?
Many issuers publish each fund's remaining buffer, remaining cap and days left in the period on the fund's website, usually as of the prior close.
Learn more
- Can You Buy a Buffer ETF in the Middle of Its Outcome Period?
- Remaining Buffer and Remaining Cap: What Do They Mean and How Are They Calculated?
- Where Can You Find a Buffer ETF’s Current Remaining Buffer and Cap?
- Buffer ETFs Explained
- All ETF calculators and tools
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For educational purposes only. This material is not investment, legal or tax advice, and it is not a recommendation or offer to buy or sell any security. Figures from third-party sources are believed to be reliable as of the dates shown but are not guaranteed. Investments involve risk, including possible loss of principal.