FAQ

We write short-term options (usually weekly) with the aim of providing a 10-20% annualized return. This means if the securities don’t change in price, or go up, we could earn see returns of 10-20% per year from option premiums, plus interest on treasury bills. If the securities drop and we have to buy shares, we’ll write calls on those shares, still aiming for a 10-20% annual return. The market might affect these returns, and a drop in NAV could offset the option income received.

WEEL will pay a quarterly dividend, starting shortly after 9/30/2024. Most of WEEL’s income will be taxed as regular income as it comes from option premiums (taxed as short-term capital gains) and interest on treasury bills. Some income may also come from dividends on the underlying ETFs, if assigned, and will be taxed as dividend income. In some instances, distributions may be recharacterized at year-end as return of capital to shareholders, which will change their tax treatment. As this is a new issue, it is not possible to estimate the likelihood such recharacterizations will occur in the future, nor estimate how much of the fund’s annual returns may be so recharacterized.

Most returns from WEEL will come from option income and interest income. We don’t expect significant long-term growth or decline in share price/NAV. NAV will likely drop in bear markets, and income received may or may not offset this decline.

WEEL seeks to be a hedge against a medium or long-term flat/range-bound market scenario, providing income even when markets don’t rise. For instance, a retiree with a 60/40 equity-to-bond mix might benefit from shifting to 35% bonds, 15% WEEL, and 50% equities. It’s also good for investors wanting higher income and lower volatility without traditional bonds and the interest rate risk that comes with those bonds. WEEL seeks to have lower volatility than the S&P 500 but higher than traditional fixed income.

We write out-of-the-money puts at the top of the wheel for initial decline protection (buffer) and income. At the bottom, we own shares and generally write calls against them, generating more income. This strategy aims for lower volatility than the S&P 500.

No. WEEL is a rules-based strategy that writes options regardless of market conditions, aiming to provide steady returns even in flat markets.

Buffered ETFs don’t provide yield if the market stays flat for 12 months buffer period. WEEL seeks to generate income consistently. Also, WEEL’s short-term options smooth out timing risk compared to annual point-to-point buffered products.

WEEL aims for less downside risk and better participation in market rebounds compared to most covered-call funds, which often fall hard in bear markets and miss out on recoveries due to equities getting called away too early. WEEL starts with cash and writes out of the money puts. Once shares are assigned, WEEL sets call strikes typically at the assigned price, aiming to participate more fully in rebounds.

Not like most bond funds. We use cash or short-term T-bills, usually less than a year in maturity, to secure puts. This means the collateral in WEEL is less affected by interest rate changes than traditional fixed income products.

WEEL primarily uses sector ETFs, diversifying across major market sectors. In a bear market, the portfolio might look like a fully-allocated equity portfolio including most styles, sectors, and market capitalization; with a slightly higher beta. Sometimes, WEEL may use individual stocks to help replicate styles and sectors. All puts are secured by cash or short-term T-bills. WEEL seeks to add value from the option writing wheel process, not from market timing or security selection.

No. WEEL only uses secured puts and covered calls, with no leverage.

Before investing you should carefully consider the fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus, a copy of which may be obtained by clicking here. Please read the prospectus carefully before you invest.


Fund Risks: An investment in the Fund entails risk. The Fund may not achieve its investment objective and there is a risk that you could lose all of your money invested in the Fund. The Fund is not a complete investment program. It is important that investors closely review all of the risks listed below and understand them before making an investment in the Fund.

Option Wheel Strategy Risk. The implementation of the Fund’s option wheel strategy, which involves cyclically selling put options and then call options on the same underlying assets (i.e., Underlying Issuers), will significantly affect the Fund’s performance in relation to the underlying assets’ price movements. This strategy’s effectiveness depends on the sequence of market movements and option expirations. For instance, if the Fund initiates the strategy by selling out-of-the-money put options and the underlying asset’s price falls below the strike price, the Fund would be obligated to purchase the asset at a potentially unfavorable price. Subsequently, if the Fund sells call options on these assets and their market price rises above the call options’ strike price, the assets would be called away, potentially limiting the Fund’s profit to the premium received.

Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets including stocks, bonds, commodities, currencies, interest rates, indexes or ETFs that hold or offer exposure to one or more of the foregoing assets. The Fund’s investments in derivatives may pose risks in addition to those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

NAV Erosion Risk Due to Distributions. When the Fund makes a distribution, the Fund’s NAV will typically drop by the amount of the distribution on the related ex-dividend date. The repeated payment of distributions by the Fund, if any, may significantly erode the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Underlying ETFs Risks. The Fund will incur higher and duplicative expenses because it holds shares of Underlying ETFs. There is also the risk that the Fund may suffer losses due to the investment practices of the Underlying ETFs.

New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.

The Fund’s investment adviser, Tidal Investments LLC (the “Adviser”), has agreed to reduce its unitary management fee (which includes all expenses incurred by the Fund except for interest charges on any borrowings, dividends and other expenses on securities sold short, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and saleof securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, distribution fees and expenses paid by the Fund under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, the “Excluded Expenses”)) to 0.99% of the Fund’s average daily net assets through at least July 29, 2025. This agreement may be terminated only by, or with the consent of, the Board of Trustees (the “Board”) of Tidal Trust II (the “Trust”), on behalf of the Fund, upon sixty (60) days’ written notice to the Adviser. This Agreement may not be terminated by the Adviser without the consent of the Board. The fee waiver is not subject to recoupment.

Option: The term option refers to a financial instrument that is based on the value of underlying securities such as stocks, indexes, and exchange traded funds (ETFs). An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset.

Call: Call options are financial contracts that give the buyer the right—but not the obligation—to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific period. A call seller must sell the asset if the buyer exercises the call.

Covered Call: The term covered call refers to a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. To execute this, an investor who holds a long position in an asset then writes (sells) call options on that same asset to generate an income stream. The investor’s long position in the asset is the cover because it means the seller can deliver the shares if the buyer of the call option chooses to exercise.

Put: A put is an options contract that gives the owner the right, but not the obligation, to sell a certain amount of the underlying asset, at a set price within a specific time.

Notional Value: Notional value is a term often used by derivatives traders to refer to the total value of the underlying asset in a contract. It can be the total value of a position, how much value a position controls, or an agreed-upon amount in a contract. Put simply, it is the face value that is used to determine payments on a financial asset. This term is used when describing derivative contracts in the options, futures, forwards, and currency markets.

For a full list of holdings, click here.

Launch & Structure partner: Tidal Financial Group

The funds are distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Peerless or Tidal.