Buffered ETFs?

A buffered ETF is similar to ETF in the sense that it trades on an exchange and has a ticker.. But vastly different in the underlying, or what’s held inside the fund. ETF’s usually hold a basket of stocks.. but in some instances they hold others. Some buffered ETFs like those over at https://www.innovatoretfs.com/pdf/product_list.pdf will promise limited downside risk. Say the market falls 10% and your holding said buffer ETF maybe your downside is only 5%. How is this possible? What’s the catch? To answer this we must travel back to our original question. What’s the underlying? Well in order to successfully produce limited downside or partial downside risk, sometimes called a buffer or barrier, they you must hold options. So in layman’s terms a buffered ETF is usually a basket of option contracts. Now the world of buffered ETFs is ever ever expanding, so look closely to what the product actually is as the phrase limited upside can be very misleading. Resources: https://tickertape.tdameritrade.com/trading/iron-condor-options-strategies-spread-your-trading-wings-15948