What Defines a "High Octane" Trap?
Tier 5 funds typically use aggressive synthetic strategies (like selling daily options or using 2x leverage on volatile assets) to generate astronomical yields.
Examples include single-stock option funds (e.g., "TSLY" for Tesla, "NVDY" for Nvidia) or "0DTE" (Zero Days to Expiration) funds.
Case Study: The TSLY Trap (2023-2024)
The Promise: 60-80% Annualized Yield.
The Reality: While Tesla stock was volatile, the fund's strategy of capping upside meant it missed the rallies but took the hits on the drops.
*Hypothetical scenario based on typical single-stock option ETF mechanics.
How to Spot a Trap (The Audit)
Before you buy any fund yielding over 15%, check these 3 signs:
- NAV Trend: Look at the price chart for the last year (exclude dividends). Is it a straight line down?
- Coverage Ratio: Is the fund earning its distribution, or is it just paying you back your own money? (Use our NAV Erosion tool).
- Strategy Complexity: If you cannot explain how they make 50%, do not buy it.
Conclusion: Building the Billion Dollar Portfolio
DivAgent's goal is to track $1 Billion in dividends. We want those dividends to be real.
A sustainable portfolio looks like a pyramid:
- Base (40%): Tier 2 (Dividend Growth)
- Middle (30%): Tier 1 & 3 (Cash & Credit)
- Top (20%): Tier 4 (Income Boosters)
- Speculation (10%): Tier 5 (Gambling money)