TLDR
- BlackRock has filed with the SEC to launch the iShares Bitcoin Premium Income ETF.
- The ETF will aim to track Bitcoin price performance while generating income through covered-call strategies.
- It will sell call options on IBIT shares and indices linked to spot Bitcoin exchange-traded products.
- Investors will receive income from premiums collected and hold fractional interests in the fund’s assets.
- The ETF will be actively managed and is expected to have higher fees compared to passive Bitcoin ETFs.
BlackRock has submitted a new filing to the SEC proposing the launch of the iShares Bitcoin Premium Income ETF, which aims to provide exposure to Bitcoin price performance while generating income through options trading. The fund intends to achieve this by selling call options on IBIT shares and spot Bitcoin-related indices, offering fractional ownership in the fund’s assets, including Bitcoin, IBIT shares, and cash.
BlackRock Introduces Covered-Call Bitcoin ETF Strategy
The ETF will actively manage a strategy of selling covered calls to collect premium income while holding Bitcoin-linked assets. BlackRock stated in its SEC filing that the ETF will write call options on IBIT and sometimes on spot Bitcoin ETP indices.
These options will grant buyers the right to purchase IBIT shares at a specific price in the future. As a result, the ETF will generate income from premiums collected on those contracts and distribute it to shareholders.
According to the filing, shares of the ETF will represent fractional interests in the fund’s Bitcoin, IBIT shares, and held cash. This hybrid structure differentiates it from passive spot Bitcoin ETFs that simply hold the asset without additional trading strategies.
The proposed ETF will face competition from three existing Bitcoin income ETFs already trading in the U.S. market. The NEOS Bitcoin High Income ETF, trading under the BTCI ticker, launched in October 2024 on the Cboe BZX Exchange.
BTCI currently manages $1.09 billion in assets and applies an annual expense ratio of 0.99%. This actively managed fund follows a similar options strategy to generate monthly income for shareholders.
The Roundhill Bitcoin Covered Call Strategy ETF (YBTC) has $225 million in assets under management. It uses a comparable options overlay approach to enhance returns while tracking Bitcoin-linked exposure.
The YieldMax Bitcoin Option Income Strategy ETF (YBIT) manages around $74 million in assets. It also generates income from writing options and holds Bitcoin-related securities to support the strategy.
Fund Structure Focuses on Income and Strategy Costs
Active management allows these funds to respond to market conditions when executing covered-call strategies. However, such strategies often lead to higher management fees compared to passive ETFs that only track spot prices.
The iShares Bitcoin Premium Income ETF’s filing did not disclose the ticker, custodian, or management fee. That is common in initial S-1 filings, which often provide minimal operational details during early registration.
Unlike IBIT, which holds Bitcoin directly with minimal trading activity, the new ETF seeks to boost income by actively selling options. This can appeal to income-focused investors who accept the trade-off of higher risk and fees.
