According to an X post released today by Eric Balchunas, senior ETF analyst at Bloomberg, Roundhill, a financial player registered with the SEC, has applied to a Bitcoin-covered call ETF. Roundhill, along with BlackRock, are now the two most renowned names in the market of Bitcoin ETFs.
Roundhill’s BTC Covered Call Strategy ETF
The SEC-registered financial advisor, Roundhill Investments, dedicated to providing cutting-edge exchange-traded funds (ETFs), has applied for a Bitcoin Covered Call Strategy ETF.
Notably, in addition to VanEck and Volatility Shares, the company has also registered an Ethereum futures ETF. The spot BTC ETF trade line is not the same as this one. According to Bloomberg Intelligence’s Eric Balchunas, if this recent application is accepted, it would hold an ETF for Bitcoin futures and then write calls and put options to generate revenue.
Given the fierce competition in the spot ETF competition, experts saw Roundhill’s preference of ETH futures to the Spot BTC ETF alternative as an attempt to strengthen its metaverse expertise or perhaps a first mover advantage. One further tool for gaining a first-mover advantage might be the BTC Covered Call Strategy ETF.
What Is A Bitcoin Covered Call ETF?
A covered call is a strategy where you sell a call option on your BTC holdings, giving you the option to buy the underlying Bitcoin ETF at a specific price in the future. This strategy is mildly bullish for near-term upside in Bitcoin price and provides passive income similar to rent. To implement this strategy, you need access to a discount stock brokerage account that allows spot Bitcoin ETF ownership. You can profit from the premium received when the call option is written.
BlackRock Steps Up In the BTC Spot ETF Game
BlackRock has applied to a buy-write ETF with a small capitalization on the Russell 2000. This is an exchange-traded fund (ETF) that gives investors exposure to a diverse portfolio of small-market capitalization firms by tracking the performance of the Russell 2000 Index.
A Russell 2000 exchange-traded fund (ETF) tracks the performance of about 2,000 US small-cap firms, whereas the S&P 500 index comprises bigger, more established corporations. But both are weighted by market capitalization.
SEC’s Present Approach
According to SEC Chair Gary Gensler, the Securities and Exchange Commission examines 8- 10 applications for an official Bitcoin exchange-traded fund. The disclosures, which indicate a potential shift in the market, align with a notable increase in the value of Bitcoin, heightening stakeholder expectations. He also stressed the careful examination that the staff is giving these applications, underscoring the thorough review procedure that the regulatory body has in place.
