On Tuesday, YieldMax bolstered its ETF library with the launch of the YieldMax Bitcoin Option Income Strategy ETF (YBIT).
YBIT utilizes an investment strategy with multiple objectives in mind. The primary goal of the fund is to provide current income, while the fund also seeks exposure to the share price of certain Bitcoin ETPs.
The fund is actively managed and has a net expense ratio of 0.99%. YBIT does not invest directly in Bitcoin, nor does it seek exposure to the current spot price for Bitcoin. Instead, the fund employs a synthetic covered call strategy to provide exposure to ETPs that seek Bitcoin exposure.
Options Strategy
To generate monthly income, YBIT will utilize options premiums. The premiums could see elevations due to volatility within the ETP’s Bitcoin allocations. Per the fund prospectus, this monthly income is not dependent on an underlying ETP’s price appreciation. Additionally, the fund may invest in short-term U.S. Treasury securities in an effort to bolster monthly income.
YieldMax notes that the fund does not directly invest in any underlying ETP. Instead, YBIT applies the synthetic covered call strategy to buy and sell a mix of standard and FLEX call and put options contracts. The prospectus adds that the contracts correspond to underlying ETPs, with values based on the ETP’s share price.
To provide synthetic long exposure to underlying ETPS, YBIT purchases call options on each ETP while simultaneously selling put options on the same products. Generally, call and put options utilized by the fund will have terms between one to twelve months, with strike prices roughly equal to the ETP’s current share price.
ZEGA financial is the fund’s sub-adviser. In evaluating Bitcoin ETPs to trade options on, ZEGA focuses on ETPs that hold spot Bitcoin instead of futures contracts. Additionally, options liquidity within ETPs remains a key consideration, in order to support trading activity for the fund.
YieldMax now has 23 ETFs listed in the United States. These funds account for over $2.2 billion in assets under management.
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