How Capital Is Allocated

SIVAX dynamically allocates capital across FCN-style structures, covered calls, reserve capital, and hedged exposures within a continuously managed portfolio.

This page should be read together with the Dynamic Hedging page, where that part of the strategy is explained in more detail.

SIVAX operates as an active allocation engine within a continuously managed portfolio, allocating capital across structured income opportunities and adjusting positioning based on market conditions, portfolio needs, and strategy objectives.

Allocation is part of how the product works. Once capital enters the fund, the strategy determines how it is deployed across available opportunities. Allocation shifts across FCN-style structures, covered calls, reserve capital, and hedging based on market conditions.

The goal is to position the portfolio using the structures that best fit the environment.

How the Strategy Adapts

SIVAX allocates capital based on market conditions, adjusting how it expresses income and risk as conditions evolve. The strategy considers:

Factor	Role in Allocation
Market volatility	Affects structure selection and payoff profile
Implied vs realized premium	Influences expected income opportunities
Directional exposure	Shapes positioning and hedge needs
Liquidity conditions	Impacts execution and allocation flexibility
Option pricing	Determines attractiveness of structured strategies
Downside risk	Guides protection and hedge intensity
Reserve capital role	Supports flexibility and portfolio balance

Core Allocation Components

FCN-style structures

FCN-style structures are a core source of structured income within the fund. They represent a portion of the portfolio depending on market attractiveness, expected premium, portfolio balance, and their interaction with the rest of the strategy.

The objective is to integrate well-positioned FCN exposure within a diversified portfolio.

Covered calls

Covered call strategies provide complementary income. The strategy allocates to call-overwriting when appropriate to generate premium income and diversify yield sources.

Reserve capital

Reserve capital may be allocated to bond-like opportunities when appropriate, keeping capital productive while supporting liquidity and flexibility. All capital remains part of the broader strategy.

How It Works in Practice

Allocation and hedging operate together, with hedge positioning evolving alongside portfolio exposure. The portfolio adapts to changes in volatility, premium levels, hedging costs, and structure performance, allowing positioning to evolve over time.

For users, this process remains mostly invisible. The strategy continuously deploys capital, balances exposures, and responds to market conditions within the portfolio.

This allows users to remain in the product while the strategy handles the underlying complexity.

What defines the product is how it is managed between entry and exit. This includes:

• Capital allocation

• Position rotation

• Reserve capital usage

• Structured exposure layering

• Overall portfolio alignment