Roundhill introduces covered call Bitcoin ETF, a first for the U.S. market

Asset manager Roundhill has introduced the first covered call Bitcoin ETF in the U.S. market, according to a press release on Jan. 18.

The exchange-traded fund is called the Roundhill Bitcoin Covered Call Strategy ETF. It trades under the ticker “YBTC” on the Cboe BZX exchange.

Dave Mazza, Chief Strategy Officer at Roundhill Investments, said:

“YBTC offers investors an attractive blend of high income potential and exposure to bitcoin … 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.”

According to the remainder of the press release, YBTC offers exposure to Bitcoin by employing a covered call strategy on Bitcoin ETFs. It aims to produce monthly income and is subject to a monthly upside cap.

Roundhill noted that Bitcoin itself does not produce operating profits or cash flows. However, because Bitcoin has shown significant price volatility, it said that it may be able to generate options income from its call selling strategy and pass that revenue to investors. This could fill a gap in crypto investment opportunities.

Roundhill’s website further explains that the fund is actively managed, meaning that investors do not need to spend time and money carrying out their own trading strategy. This managed approach is a key feature of covered call ETFs.

Fund provides access to futures, not spot

Bloomberg ETF analyst James Seyffart acknowledged the launch, noting that Roundhill’s YBTC “uses futures not spot but will generate yield via options.”

Roundhill’s own website confirms that YBTC is not a spot Bitcoin ETF and does not invest in Bitcoin directly. This approach sets YBTC apart from various Bitcoin ETFs that gained approval on Jan. 10, including those from BlackRock and Fidelity.

YBTC currently has $2.5 million of funds under management. A further breakdown indicates that the fund consists 93.8% of U.S. Treasury Bills, valued at $2.35 million. Another 7.35% consists of ProShares’ Bitcoin Strategy ETF (BITO), valued at just $184,376. Roundhill has not commented on the fact that the fund seems to hold small proportion of cryptocurrency-related shares at present.

Unrelated to Roundhill’s current offering, Grayscale also aims to launch its own covered call Bitcoin ETF. That fund will instead provide exposure to a spot Bitcoin exchange-traded fund, specifically the firm’s newly approved GBTC ETF.