A Little-Known Bitcoin ETF Promises High Returns
A relatively unknown Bitcoin ETF called the Roundhill Bitcoin Covered Call Strategy ETF (YBTC) recently entered the U.S. market, offering impressive annual returns to investors. The fund announced its first distribution of $1.33 per share, resulting in a 33% annual distribution yield. This surpasses the promised returns of riskier crypto firms like Terraform Labs and Celsius. Additionally, it exceeds the safe yield considered by U.S. regulators for crypto investments.
Investment Strategy and Potential Income
The YBTC fund aims to achieve its investment objectives through a synthetic covered call strategy, providing investors with monthly income. This involves selling call options on a security while holding an equivalent amount of that security in reserves. By investing in Bitcoin futures ETFs, the fund capitalizes on historically significant options premiums, increasing income potential.
Not Directly Investing in Bitcoin
It’s important to note that the YBTC fund does not directly invest in Bitcoin or track its spot price. Instead, it focuses on options contracts and utilizes U.S. treasury bills as assets. Investors seeking direct exposure to Bitcoin’s price should consider alternative investments.
An “Answer” for Earning with BTC at No Liquidation Risk
Fred Krueger, a former prop trader and Bitcoin ETF enthusiast, believes that the YBTC fund provides a solution for earning 30% with BTC without the risk of liquidation. If the market goes down, investors effectively own Bitcoin at a loss but earn premiums from puts if the market goes up.
Closing Thoughts: A Unique Opportunity with YBTC
The Roundhill Bitcoin Covered Call Strategy ETF presents a unique opportunity for investors looking to capitalize on Bitcoin’s potential while earning high income. With its synthetic covered call strategy and focus on options premiums, the fund offers an alternative approach to traditional Bitcoin investments. However, it’s essential to carefully consider the risks and consult with a financial advisor before making any investment decisions.
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