According to Cointelegraph, asset manager REX Financial has introduced a new exchange-traded fund (ETF) aimed at generating income through options writing on cryptocurrency stocks. Announced on September 18, the REX Crypto Equity Premium Income ETF employs a 'covered call' strategy. This involves holding a portfolio of 25 crypto stocks and writing out-of-the-money options against them to earn income from the options premiums. The ETF's holdings are based on the BITA Crypto Assets & Digital Payments Index, which includes companies involved in crypto mining, trading, custody, blockchain technology development, and digital payment solutions.
Greg King, CEO of REX, stated that the fund applies a targeted covered call strategy to some of the most disruptive companies in the crypto sector. The BITA index has seen a return of over 80% this year, partly due to the surge in crypto-related stocks following Donald Trump's victory in the November 5 presidential election. This ETF marks REX's third venture into covered call ETFs, following similar launches for Nasdaq and artificial intelligence stocks. Additionally, REX has previously introduced other crypto-related ETFs, such as the T-REX 2X Long MSTR Daily Target ETF (MSTU), which offers leveraged exposure to MicroStrategy, a well-known Bitcoin buyer.
The concept of options involves contracts that provide the right to buy or sell an underlying asset at a predetermined price. Covered calls, in particular, generate income by agreeing to sell an asset at a specific price, earning an upfront premium while potentially forfeiting further gains. The launch of this ETF comes amid a shift in the regulatory landscape in the United States. Following Trump's election, US regulators have shown a more lenient approach towards crypto oversight, with the former president promising to transform the US into the 'world’s crypto capital.' As a result, more than half a dozen proposed cryptocurrency ETFs are awaiting regulatory approval.
Industry experts suggest that crypto index ETFs are becoming a significant focus for issuers, following the listing of ETFs holding Bitcoin (BTC) and Ether (ETH) earlier this year. On December 2, Bernstein Research indicated that US ETH ETFs might soon include staking yield features. This development reflects the growing interest and evolving landscape of cryptocurrency investment products.
