Global crypto asset manager Bitwise Asset Management has launched a trio of option income strategy ETFs, which seek to capitalise on volatility through rigorous daily active management, leveraging Bitwise’s pure-play focus on the crypto market.
The ETFs’ “covered call” strategies involve selling call options on the stocks of Strategy [NasdaqGS:MSTR], Coinbase [NasdaqGS:COIN], and MARA Holdings [NasdaqCM:MARA], respectively, while maintaining long exposure to the underlying stocks.
Covered call strategies involve gaining exposure to a security while simultaneously selling out-of-the-money call options on it. The strategy is designed to provide regular income distributions to investors from option sales, while aiming to benefit from the security’s potential gains.
“Crypto is well known historically both for its performance and its high volatility,” said Bitwise CEO Hunter Horsley. “That volatility presents a unique opportunity to generate income.”
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What is a covered call option strategy?
A covered call strategy involves writing (selling) covered call options in return for the receipt of premiums. The seller of the option gives up the opportunity to benefit from price increases in the underlying instrument above the exercise price of the options but continues to bear the risk of underlying instrument price declines.
The covered call strategy used by these ETFs is “synthetic” because the funds’ exposure to the price return of the underlying security is derived through options exposure, rather than direct holdings of the shares of the underlying security.
The three ETFs, IMST, ICOI, and IMRA, are to be managed by Jeff Park and the Bitwise portfolio management team. The ETFs aim to generate monthly income and maximize upside exposure to the underlying stocks, using daily active management and nimble, market-based adjustments.
The ETFs, which have listed in the US, specifically focus on income from options on these stocks – they are not providing direct exposure to the crpyotcurrency market.
Monthly income and capital appreciation
Park is a distinguished expert in crypto and institutional derivatives trading with previous experience at Corbin Capital, Harvard Management Company, and Morgan Stanley. He and the Bitwise portfolio management team will seek to generate monthly income for investors and maximize participation in the stocks’ capital appreciation, subject to limits on potential gains, by selectively selling call options with the goal of balancing momentum, market news, and derivative-market dynamics.
“The high volatility of stocks like MSTR, COIN, and MARA creates compelling opportunities to generate income,” said Park. “But it’s essential to be constantly monitoring news, capital flows, regulatory developments, options pricing, market sentiment, and other dynamics to most intelligently capitalize on this strategy. That’s the approach we’re taking with IMST, ICOI, and IMRA, and we hope to bring investors the combination of monthly income and strong, limited participation in equity gains as a result.”
The ETFs will make income distributions monthly, and the net expense ratio for each is 0.98%. The gross expense ratio for ICOI and IMST is 0.99%, with a fee waiver in place through March 25, 2027.
Founded in 2017, Bitwise offers industry-leading education and a broad suite of investment products spanning ETFs, private funds, multi-strategy solutions, separately managed account strategies, and staking. The firm has over 100 technology and investment professionals and serves as a partner to thousands of investment professionals and financial institutions looking to understand and gain exposure to bitcoin and other crypto assets.
