Mike Loukas

Mike Loukas is the founder and CEO of TrueShares, a firm he launched in 2019 after 30 years in the investment business. TrueShares has grown to 21 ETF tickers across all three exchanges, spanning actively managed funds, structured outcome products, income strategies, and their newest launches. They snuck their first products onto the exchanges right before COVID triggered a moratorium on new listings in 2020. On this episode of Behind the Ticker, Mike joins Brad to break down Q-Bull (QBUL) and Q-Bear (QBER), a pair of quarterly-resetting hedged equity products designed to give investors directional market exposure with principal protection.

The TrueShares Platform: Not a White Label Shop

Loukas makes it clear that TrueShares is not in the white label business. Their intent was never to compete with the white labelers. About 75% of their products are internally managed portfolio solutions, with the remaining 25% coming from opportunistic sub-advisory relationships. When sub-advisors do come into the picture, it works two ways: either TrueShares identifies a strategy gap and recruits a specialist to fill it, or a manager approaches them with a product that fits their platform. Either way, the product needs to be timely and have a realistic path to critical mass. Because in this business, as Loukas puts it, the ability to actually buy the ETF with daily volume is as important as the strategy itself.

The lineup today includes traditional fundamental active management, an AI and deep learning product (a concentrated 20-21 name portfolio launched in 2020), a dozen defined outcome buffer ETFs, and a growing income and yield suite covering both domestic and international markets. The firm runs two parallel tracks: portfolio solutions (tools for building complete portfolios) and stand-alone investments targeting specific asset classes or pain points in the market.

How Q-Bull and Q-Bear Actually Work

The concept is principal protection with directional exposure. Q-Bull targets upside. Q-Bear targets downside. Both reset every three months.

Here's the mechanics: the principal goes into Treasury securities. The anticipated yield from those Treasuries gets used to buy out-of-the-money options. For Q-Bull, that yield buys call options roughly 5% out of the money. For Q-Bear, it buys put options at a similar strike. Because these are Treasuries plus options structures, TrueShares keeps the construction intentionally simple compared to buffer products that might use four to seven different contracts. The simplicity is a feature.

If the market stays between plus and minus 5% in a given quarter, you're flat, earning Treasury return. If the S&P moves more than 5% in either direction, the corresponding product kicks in and starts generating convexity. Loukas explains that if the market drops 10% in a quarter, Q-Bear could generate roughly a 6% positive return. On the Q-Bull side, a 7% up-move might capture one to two percent initially, with returns accelerating the further the market moves beyond the threshold.

The 5% threshold isn't fixed. It can fluctuate between roughly 4% and 6% depending on where Treasury yields sit. Higher yields mean more premium available to buy options, which can tighten that band. Market volatility also affects pricing: good volatility (upside) drives up call prices, bad volatility (downside) drives up put prices. But the quarterly reset means the products can re-adjust to the new volatility environment every three months rather than sitting with stale strikes for a full year.

Why Quarterly and How to Use Them

The quarterly reset was chosen for versatility. Loukas explains that with annualized products, or even six-month products, options decay causes the product's price to diverge from the market's actual moves over time. That annualized return everyone is addicted to doesn't capture the reality that the bulk of returns come in short bursts. A three-month duration keeps the correlation tighter to actual market moves, so what you see in the market more closely matches what you see in your position.

For an all-weather portfolio, you own both Q-Bull and Q-Bear, covering both tails. Start at 50/50 and toggle based on conviction. If you're more bullish, go 75/25 toward Q-Bull. The downside in either product is limited to Treasury risk.

Brad pointed out what he sees as the real sweet spot: active managers who go to cash or Treasuries when their signals turn negative. Instead of sitting in dead money, rotating into Q-Bull gives you Treasury-level downside with the chance to capture upside if you're wrong about direction. And here's a pairing play with buffer ETFs: buffer products typically cap upside participation. Mixing in Q-Bull effectively uncaps that upside by adding convexity above the buffer's ceiling. Loukas calls it "filling gaps with existing product." For anyone who has a set-it-and-forget-it approach, the quarterly auto-reset handles itself without any active management required.

Key Takeaways

• Q-Bull (QBUL) and Q-Bear (QBER) are quarterly-resetting hedged equity products. Principal goes into Treasuries; the yield funds directional options positions roughly 5% out of the money.
• Between +5% and -5% market moves in a quarter, you earn Treasury returns. Beyond that band, convexity kicks in. A 10% market drop could generate roughly 6% positive return from Q-Bear.
• The quarterly reset keeps correlation to market moves tighter than annual products, reducing tracking drift from long-dated options decay. The threshold can vary between 4-6% based on Treasury yields.
• TrueShares now has 21 tickers with about 75% internally managed solutions and 25% selective sub-advisory. They are not a white label platform.
• The products are designed for tactical managers who rotate into Treasuries during risk-off periods, and they can be paired with buffer ETFs to uncap upside participation.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.