Weekly Cashflow With a Hedge

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Investors love income. But they hate whiplash. What if you could get one without too much of the other? Enter BLOX (Nicholas Crypto Income ETF) (we have previously covered this fund in more detail) and SLTY (YieldMax Ultra Short Option Income Strategy ETF) …. two funds that not only pay weekly distributions, but also appear to move like mirror images of each other. Put them together, and you’ve got something unusual: a high-yield, hedged income strategy.

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The Yield Story

Let’s start with the numbers, based on their recent distributions.

These figures are run-rates, not guarantees. Option income can swing sharply with volatility, and SLTY is brand new. Still, even assuming they normalize closer to 30% each, the combined yield remains striking.

What’s Under the Hood

Here’s where things get interesting. BLOX and SLTY are structured in fundamentally opposite ways.

• BLOX is built to ride the crypto wave. It holds crypto-linked equities, Bitcoin/Ethereum ETFs, and layers on a covered-call strategy to squeeze extra income from volatility. It also parks some Treasuries and cash as option collateral. BLOX is, simply, a long-risk fund with a crypto accent.

• SLTY looks almost like the anti-BLOX. According to its latest holdings:

  • Over 75% of its assets sit in Treasury bills, providing ballast and collateral.

  • It holds short positions in names like Astera Labs, Bloom Energy, Bitdeer Technologies, and Circle Internet Group; companies often tied to AI, clean energy, or crypto themes.

  • Around those shorts, it runs an options overlay (calls and puts) to harvest weekly premium.

Here’s a simplified snapshot of SLTY’s book:

This combination makes SLTY structurally short risk, with income coming from both short exposure and options.

Hedging, in Plain English

Hedging is portfolio judo. Instead of trying to dodge every punch the market throws, you put one position in place to absorb the blows another might take. BLOX thrives when markets and crypto rally; SLTY perks up when growth stocks stumble. Put them together and you’re less likely to see your account swing wildly in one direction.

Think of BLOX as sunscreen (happy in bright sunshine) and SLTY as an umbrella (relieved when clouds gather). Neither is stylish alone, but together you’re covered no matter the weather.

What This Means for Dividend Investors

Holding both in equal weights and rebalancing creates three potential benefits:

1. Weekly paychecks. Instead of quarterly distributions, you get a drip-feed of income every Friday.

2. Reduced volatility. One zigs while the other zags, smoothing your account balance.

3. Volatility harvesting. Regular rebalancing forces you to sell the fund that just rallied and buy the one that lagged … this is the definition of “buy low, sell high.”

Here’s what a simple $100,000 split might look like under a 30% yield assumption for each fund:

That’s a blended 30% yield, paid in weekly installments.

Risks and Your Reality Check

• Yield sustainability. Distributions could shrink if option premiums fall.

• Drag in bull markets. SLTY’s shorts lose when risk assets rally, so you’ll always be trimming winners and buying laggards.

• Correlation drift. “Perfect inverse” is a snapshot, not a permanent law. SLTY is a new fund with minimal history, and it does not include any periods of extreme volatility. Expect the inverse correlation to break down during periods of panic!

• High costs and taxes. Both funds charge over 1%, and weekly payouts can complicate tax reporting.

Bottom Line

Pairing BLOX and SLTY is not for the faint-hearted. Yields above 30% are unlikely to last forever, and the mechanics are complex. But for dividend investors looking to see hedging in action (one fund long risk, the other short, both harvesting option income), this duo is worth a closer look. You may not capture every bull-market dollar, but you’ll collect steady weekly checks while enjoying a smoother ride than either fund alone.