Company: SVIX
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001213900-25-075845
Chunk: 29

Company: VS Trust
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 29
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or no trading, thereby preventing prompt liquidation of futures positions and potentially subjecting a Fund to substantial losses. If
trading is not possible, or if a Fund determines not to close a futures position in anticipation of adverse price movements, the Fund
will be required to make daily cash payments of variation margin. The risk the Fund will be unable to close out a futures position will
be minimized by entering into such transactions on a national exchange with an active and liquid secondary market.

F-19

Option Contracts

An option is a contract that gives the buyer the
right, but not the obligation, to buy or sell a specified quantity of a commodity or other instrument at a specific (or strike) price
within a specified period of time, regardless of the market price of that instrument. There are two types of options: calls and puts.
A call option conveys to the option buyer the right to purchase a particular futures contract at a stated price at any time during the
life of the option. A put option conveys to the option buyer the right to sell a particular futures contract at a stated price at any
time during the life of the option. Options written by a Fund may be wholly or partially covered (meaning that the Fund holds an offsetting
position) or uncovered. In the case of the purchase of an option, the risk of loss of an investor’s entire investment (i.e., the
premium paid plus transaction charges) reflects the nature of an option as a wasting asset that may become worthless when the option expires.
Where an option is written or granted (i.e., sold) uncovered, the seller may be liable to pay substantial additional margin, and the risk
of loss is unlimited, as the seller will be obligated to deliver, or take delivery of, an asset at a predetermined price which may, upon
exercise of the option, be significantly different from the market value.

When a Fund writes a call or put, an amount equal
to the premium received is recorded and subsequently marked to market to reflect the current value of the option written. Premiums received
from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or closed
are added to the proceeds or offset against amounts paid on the underlying futures, swap or security transaction to determine the realized
gain (loss).

When a Fund purchases an option, the Fund pays
a premium which is included as an asset on the Statement of Financial Condition and subsequently marked to market to reflect the current
value of the