BlackRock is expected to debut a new bitcoin 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.