YBTC ETF Explained - High Yield Bitcoin Covered Call Strategy



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YBTC ETF Explained - High Yield Bitcoin Covered Call Strategy - High Yield with High Risk

The Roundhill Bitcoin Covered Call Strategy ETF (YBTC) offers investors an eye-catching annual distribution yield of 30-45%, paid weekly. But how does it work, and should you invest?

How YBTC Generates Income

  • Uses a synthetic long position on Bitcoin ETFs (via long call + short put at the same strike).
  • Writes weekly out-of-the-money calls to collect option premiums.
  • Premiums are distributed as income, resulting in very high yields.
  • Part of the distribution may be Return of Capital (ROC), not pure profit.

Key Features

  • Yield: ~35-45% (distribution), but SEC yield is far lower (~3-6%).
  • Upside Capped: Gains are limited because calls are sold every week.
  • Downside Risk: NAV drops with Bitcoin in bear markets; premiums only soften losses.
  • Expense Ratio: ~0.95% annually.

Risks to Consider

  • High volatility exposure to Bitcoin ETF prices.
  • Distribution is not guaranteed and may include ROC.
  • Not a bond alternative - capital can erode during crypto downturns.

Is YBTC Right for You?

YBTC may suit investors seeking high weekly income and comfortable with crypto volatility. However, because it sacrifices upside and carries risk, most investors should keep exposure limited:

  • Conservative allocation: <5% of portfolio
  • Aggressive allocation: up to 10% for income enhancement
  • Use spot Bitcoin ETFs for long-term growth exposure

Final Thoughts

YBTC is a unique income-generating ETF, but it’s not a core holding. Treat it as a high-yield satellite position in a diversified portfolio, and understand that the eye-popping yield comes with trade-offs.

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