This innovative fund includes shares of products like ProShares’ Bitcoin futures ETF (BITO).
On January 18, American asset management company Roundhill announced the launch of the first-ever covered call Bitcoin ETF for the US market in a press release. This fund, now trading on the stock exchange, is listed under the name Roundhill Bitcoin Covered Call Strategy ETF and on the Cboe BZX exchange with the ticker symbol “YBTC”.
Dave Mazza, Chief Strategy Officer at Roundhill Investments, stated:
“YBTC offers investors an attractive blend of high income potential and exposure to bitcoin. [Also] Investors have clamored for a covered call ETF with exposure to bitcoin and we are proud to be the first to bring such a product to the U.S. market.”
As indicated in the press release, YBTC offers exposure to Bitcoin through its covered call strategy applied to Bitcoin ETFs. The fund aims to generate monthly income and cap it with a monthly upper limit.
Roundhill’s statement noted that while Bitcoin does not provide operational profit or cash flow, it exhibits significant price fluctuations. Hence, the call selling strategy can generate option income, which can then be distributed to investors. This aims to address a gap in crypto investment options.
Furthermore, Roundhill‘s website mentions that the fund is actively managed, allowing investors to save time and resources without having to implement their own trading strategies. This management style is a key feature of covered call ETFs.
The Fund Offers Access to Futures Instead of Direct Bitcoin
James Seyffart, an ETF analyst at Bloomberg, commented on the launch of Roundhill’s YBTC, noting that “the fund invests in futures instead of spot Bitcoin and will generate returns through options.”
According to information on Roundhill’s website, YBTC does not invest directly in Bitcoin and is not a spot Bitcoin ETF. This strategy differentiates YBTC from other Bitcoin ETFs like those approved on January 10 by BlackRock and Fidelity.
Currently, with a fund size of $2.5 million, YBTC consists of 93.8%, or $2.35 million, in U.S. Treasury Bonds. The remaining 7.35% is composed of shares in the ProShares Bitcoin Strategy ETF (BITO), valued at $184,376. Roundhill has not yet made any announcements regarding the fund’s limited exposure to crypto-related stocks.
As a development unrelated to Roundhill’s new product, Grayscale also plans to launch its own covered call Bitcoin ETF. This fund will invest in a spot Bitcoin exchange-traded fund instead of providing direct exposure to the company’s newly approved GBTC ETF.
