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06/16 13:20

BlackRock's new bitcoin ETF lets institutions earn

BlackRock's new bitcoin ETF lets institutions earn from volatility. There's a catch.#World Cup Predictions: 100,000 USDT Daily #BTC Prophet: 20-Day 380 Million HTX Challenge #BTC Prophet: 20-Day 380 Million HTX Challenge

Summary This is an excerpt from CoinDesk newsletter 'Daybook.' Sign up here, if you haven't already. BlackRock is expected to debut a new bitcoin $BTC$66,389.05 ETF later Tuesday. The fund offers more than just exposure to the cryptocurrency, it is designed to generate additional income from bitcoin's volatility. The iShares Bitcoin Premium Income ETF (BITA) provides exposure to bitcoin's price by holding shares of BlackRock's existing spot bitcoin ETF, IBIT. It also generates income by selling call options against those holdings. That income is directly tied to bitcoin's volatility. The wilder the price swings, the more expensive options become, and the greater the premium the fund collects from selling them. Even in calm conditions, bitcoin is more volatile than most traditional assets, so it's a fertile asset for this kind of income strategy. Selling a call option, known as writing, is like selling insurance against a price rally. The seller collects a premium, and if the price stays below the specified, or strike, price, it keeps the cash. If the price rises above the strike, the seller compensates the buyer for the upside, potentially incurring large losses

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