Roundhill Launches Bitcoin Covered Call ETF

Roundhill Investments announced the launch of the Roundhill Bitcoin Covered Call Strategy ETF (YBTC) on the Cboe BZX today. The actively managed YBTC is the first bitcoin covered call strategy ETF to list in the U.S.

While the fund seeks to offer investors exposure to bitcoin, it does not invest in bitcoin directly. Rather, it aims to provide exposure to the price return of an ETF that invests principally in bitcoin futures contracts.

YBTC employs a covered call strategy on bitcoin ETFs. It’s designed to generate monthly income while providing exposure to bitcoin’s price movements (subject to an upside cap).

“Covered calls were the ETF trend of 2023 as advisors sought alternative income strategies,” said VettaFi’s Head of Research Todd Rosenbluth. “With spot bitcoin ETFs now trading and likely to remain volatile, this new ETF could find an audience in a crowded cryptomarket.”

See more: “Spot Bitcoin ETFs Finally Arrive

Retaining Upside While Providing Income

Since bitcoin has been historically volatile, Roundhill’s new ETF could generate significant options income from its call-selling strategy. In turn, YBTC seeks to provide current income to shareholders.

Similar to gold, bitcoin doesn’t yield operating profits or cash flows. This presents a challenge for investors focused on income. Traditionally, this gap has led to the popularity of on-chain strategies such as staking for crypto assets like ether. Meanwhile, YBTC overlays a covered call strategy on bitcoin to let investors retain upside to bitcoin while addressing current income needs.

“YBTC offers investors an attractive blend of high income potential and exposure to bitcoin,” said Dave Mazza, chief strategy officer at Roundhill Investments. “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.”

The fund seeks to pay any distributions on a monthly basis. It charges 95 basis points.

The Bitcoin ETF Rush

The launch of YBTC follows the SEC giving the green light for multiple spot bitcoin ETFs. After a great deal of hype and speculation, the SEC on January 10 approved 11 spot bitcoin ETFs to come to market.

Among the spot bitcoin ETFs that launched last week were the VanEck Bitcoin Trust (HODL), the Bitwise Bitcoin ETF Trust (BITB), and the Grayscale Bitcoin Trust ETF (GBTC). Fidelity, WisdomTree, and BlackRock were also among the issuers that launched such funds.

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