Company: SVIX
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004207
Chunk: 195

Company: VS Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 195
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 Funds that enter into futures contracts maintain collateral at
the broker in the form of cash and/or securities. Pursuant to the futures contract, each Fund generally agrees to receive from or pay
to the broker(s) an amount of cash equal to the daily fluctuation in value of the futures contract. Such receipts or payments are known
as variation margin and are recorded by each Fund as unrealized gains or losses. Each Fund will realize a gain or loss upon closing of
a futures transaction.

F-26

Futures contracts involve, to varying degrees,
elements of market risk (specifically exchange rate sensitivity, commodity price risk or equity market volatility risk) and exposure
to loss in excess of the amount of variation margin. The face or contract amounts reflect the extent of the total exposure each Fund
has in the particular classes of instruments. Additional risks associated with the use of futures contracts are imperfect correlation
between movements in the price of the futures contracts and the market value of the underlying Index or commodity and the possibility
of an illiquid market for a futures contract. With futures contracts, there is minimal but some counterparty risk to the Funds since
futures contracts are exchange-traded and the credit risk resides with the Funds’ clearing broker or clearinghouse itself. Many
futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading
may be suspended for specified times during the trading day. Futures contracts prices could move to the limit for several consecutive
trading days with little 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.

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