Considering how well bitcoin has performed over the last couple of months, it shouldn’t come as a surprise that many advisors and investors may want to add exposure to their portfolio. Bitcoin has continued to rally to new high as the months have gone on. Furthermore, ongoing domestic concerns, along with worries over rising global debt, are renewing bitcoin’s use case as a store of value.
However, the question remains, where does a bitcoin allocation fit in one’s portfolio? It’s a relatively unique asset in terms of how it behaves, so figuring out which portfolio asset to switch it with can be a bit tricky.
This is another moment where a Calamos Protected Bitcoin ETF can offer a great use case. These funds use options overlays to create a compelling mix of bitcoin upside and risk management. By doing so, Protected Bitcoin ETFs may be easily slotted in to potentially replace traditional assets within one’s portfolio.
The Equity Use Case
For instance, if one was looking to swap out some of their equity exposure for bitcoin, they may want to look at the Calamos Bitcoin 80 Series Structured Alt Protection ETF – October (CBTO). Through the use of its options strategy, CBTO limits maximum loss to -20% over its outcome period, following fees and expenses. This risk management can help its investors protect their principal if the cryptocurrency sees a drawdown.
However, CBTO offers far more than risk management for a portfolio. The fund launched with an upside cap a little above 40%. This cap is higher than one may expect from a traditional defined outcome fund.
This gives CBTO a compelling use case as an equity replacement. The fund can tap into bitcoin rallies to offer a return profile that is highly similar to a traditional equity strategy. These return opportunities come alongside the guaranteed security that comes with Protected Bitcoin ETFs.
Swapping Out Fixed Income
Protected Bitcoin ETFs don’t just work well as an equity replacement, either. The Calamos Bitcoin Structured Alt Protection ETF – October (CBOO) could offer a potent application as a fixed income alternative.
Compared to CBTO, CBOO instead offers 100% downside protection through its outcome period, after fees and expenses. This heavier tilt towards risk management may help the fund have a risk profile that is more like that of a traditional fixed income fund.
CBOO’s upside cap is lower than that of CBTO’s. However, the fund may still offer long-term gains from bitcoin’s upward momentum. These long-term opportunities are coming with that 100% capital protection, giving investors peace of mind while they put their fixed income funds to work to chase bitcoin rallies.
Overall, the Calamos suite of Protected Bitcoin ETFs may provide advisors and investors more flexibility when it comes to applying bitcoin to their portfolios. Check out the Calamos Protected Bitcoin ETFs website to learn more.
For more news, information, and strategy, visit the Crypto Content Hub.
Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
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The Fund seeks to provide investment results that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant (“BRRNY”) (“Spot bitcoin”) up to a predetermined upside cap (the “Cap”) while seeking to protect against 100% of losses (before fees and expenses) of (i) Spot bitcoin or (ii) one or more of the Underlying ETPs and/or Bitcoin Indexes, in each case, over a period of approximately one (1) year (the “Outcome Period”). The Fund will not invest directly in bitcoin. Instead, the Fund seeks to provide investment results that, before taking fees and expenses into account, track the positive price return of Spot bitcoin by investing in options that reference the price performance of either (i) one or more underlying exchange-traded products (“Underlying ETPs”) which, in turn, own bitcoin or (ii) one or more indexes that are designed to track the price of bitcoin (“Bitcoin Index”).
The Target Outcome may not be achieved, and investors may lose some or all of their money. The Fund is designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds the Fund until the end of the Outcome Period. While the Fund seeks to provide 100% protection against losses experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee it will successfully do so. If the Fund’s NAV has increased significantly, a shareholder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in the Fund is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection and Cap will be successful and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.
An investment in the Fund is subject to risks, and you could lose money on your investment in the Fund. There can be no assurance that the Fund will achieve its investment objective. Your investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund can increase during times of significant market volatility. The Fund also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund’s prospectus.
Digital Assets Risk: The bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the bitcoin network is the most established digital asset network, the bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs’ shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs’ shares.
Investing involves risks. Loss of principal is possible. The Fund(s) face numerous market trading risks, including authorized participation concentration risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, clearing member default risk, correlation risk, derivatives risk, equity securities risk, investment timing risk, large-capitalization investing risk, liquidity risk, market maker risk, market risk, non-diversification risk, options risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, underlying ETF risk and valuation risk. For a detailed list of fund risks see the prospectus.
100% capital protection is over a one-year period before fees and expenses. All caps are pre-determined.
Cap Rate – Maximum percentage return an investor can achieve from an investment in the Fund if held over the Outcome Period.
Cap Range – Cap ranges are based on the last 15 trading days prior to range announcement, based on market conditions during the sample period, and are subject to change. The actual cap rate may be different based on market events.
Protection Level – Amount of protection the Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
