Add as a preferred source on GoogleiShares Proposes Bitcoin (BTC) Fund With Options-Based Downside Protection
Each tranche would typically start with a protection level near 90% of its reference asset’s value, while gains would be capped and levels could shift over time.
An Oct. 19 filing by iShares Trust proposes a Bitcoin (BTC) fund that would combine exposure to the asset with options-based downside protection, while limiting potential gains.
The proposed iShares Bitcoin Managed Protection ETF (PBIT) would use overlapping options tranches. Each tranche would typically begin with a protection level near 90% of its reference asset’s value when its options are acquired. That leaves about 10% initial loss exposure to the reference asset before fees and expenses; it is not a stated maximum-loss limit for PBIT investors. The filing says protection floors and upside caps can differ among tranches and change over time.
PBIT would not invest directly in Bitcoin or Bitcoin exchange-traded products (ETPs). The fund remains a proposal, and its shares cannot yet be sold.
BlackRock’s iShares Bitcoin Premium Income ETF (BITA) offers a different options strategy. It seeks monthly premium income by selling call options on BlackRock’s iShares Bitcoin Trust ETF (IBIT) covering about 25% to 35% of its portfolio. Those calls can reduce BITA’s participation if Bitcoin rises sharply.
Bitcoin options represented 58.9% of $129 billion in derivatives open interest in an Oct. 15 snapshot.
Enna Lee
ReporterEnna Lee reports on investing and digital-asset markets for TokenPost. Send corrections or tips to info@tokenpost.com.