Proposed Fund Would Sell Covered Calls to Generate Investor Returns
BlackRock has filed to establish a Delaware trust company to support its proposed iShares Bitcoin Premium Income ETF, signaling its intent to expand beyond its record-breaking spot Bitcoin ETF, IBIT. The new product is designed as a yield-generating alternative for investors seeking steady income from Bitcoin exposure.
Covered Call Strategy Explained
According to ETF analysts, the proposed ETF would use a covered call strategy by selling options on Bitcoin futures contracts. The premiums collected would generate regular distributions for investors, though at the cost of limiting upside gains compared to holding Bitcoin outright.
Bloomberg’s Eric Balchunas described the filing as “a covered call Bitcoin strategy in order to give BTC some yield. This will be a ’33 Act spot product, a sequel to the $87 billion IBIT.”
Registering the Delaware trust indicates BlackRock may soon file an S-1 or 19b-4 with the Securities and Exchange Commission (SEC), a required step before formal approval.
Building on IBIT’s Success
BlackRock’s original iShares Bitcoin ETF (IBIT), launched in January 2024, has become the world’s largest spot Bitcoin fund with over $60.7 billion in inflows, dwarfing competitors such as Fidelity’s FBTC at $12.3 billion. The Premium Income ETF is positioned as a complement rather than a replacement, targeting investors who prefer yield over price appreciation.
Market Context
Bitcoin has long been viewed as a non-yielding asset, one reason traditional finance firms were initially hesitant to embrace it. Yield-focused products are now emerging, including strategies backed by large corporate Bitcoin treasuries.
An analyst noted, “This product caters to a more conservative class of investors who want Bitcoin exposure but also steady returns. It shows how rapidly financial engineering is adapting to digital assets.”
If approved, BlackRock’s Bitcoin Premium Income ETF would become one of the first yield-generating Bitcoin products in the U.S., expanding the range of institutional-grade crypto investment vehicles. The move underscores BlackRock’s strategy of focusing on Bitcoin and Ether while leaving altcoin ETFs to other issuers.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.