KEYTAKEAWAYS
- The proposed ETF would hold physical Bitcoin while using covered call options to create additional income.
- Option premiums, primarily from calls written on IBIT shares, are intended to provide regular yield at the cost of limited upside.
- The filing highlights growing demand for income-oriented crypto ETFs alongside traditional spot Bitcoin products.
CONTENT
BlackRock has filed for an iShares Bitcoin Premium Income ETF that combines spot Bitcoin exposure with an actively managed covered call strategy to generate yield.
BLACKROCK PLANS A BITCOIN PREMIUM INCOME ETF
Major asset manager BlackRock plans to launch the “iShares Bitcoin Premium Income ETF,” expanding its lineup of Bitcoin investment products. The fund aims to provide direct spot Bitcoin exposure while also generating income.
SEC FILING AND STRUCTURE
According to filings submitted on Friday to the U.S. Securities and Exchange Commission (SEC), the new fund, like BlackRock’s existing spot Bitcoin ETF IBIT, will primarily track the price of Bitcoin by holding physical Bitcoin. At the same time, it will generate income through an actively managed covered call strategy.
HOW THE COVERED CALL STRATEGY WORKS
To produce income, the fund’s investment adviser will actively sell call options, primarily on IBIT fund shares, though at times the options may reference other Bitcoin-tracking ETP indices. The option premiums collected will serve as the fund’s income source.
POSITIONING AMONG CRYPTO INCOME PRODUCTS
The fund has not yet announced a ticker and, once launched, will join a growing group of covered call crypto investment products. Such products are structured to generate monthly income by giving up part of the upside, earning option premiums in exchange for agreeing to sell at a predetermined strike price.
