BlackRock has launched a new exchange-traded fund that offers investors double-digit payouts by selling call options on its Bitcoin holdings, limiting potential upside gains. The iShares Bitcoin Premium Income ETF (BITA) combines spot Bitcoin exposure with monthly income generation. The firm’s head of digital assets stated the product, arriving after similar filings from Goldman Sachs, targets yield-seeking institutional investors.
BlackRock announced the launch of an exchange-traded fund designed to provide monthly income by selling call options on its Bitcoin holdings. The iShares Bitcoin Premium Income ETF (BITA) will trade on the Nasdaq and seeks to offer participation in Bitcoin’s upside while generating option premiums.
The fund holds a combination of actual Bitcoin and shares of the firm’s existing iShares Bitcoin Trust ETF (IBIT), which has $48.6 billion in assets. It generates cash for monthly distributions by selling options contracts against up to 35% of its portfolio.
Robert Mitchnick, head of digital assets at BlackRock, described the ETF as a hybrid product with a different profile than IBIT. “The way the math works today, you can think of it as 70% upside retention in IBIT and a mid-to-high-teens yield,” he said in an interview.
The yield is generated from premiums paid by buyers of the call options. High Bitcoin volatility typically makes these premiums valuable, creating a steady income stream for distribution.
Mitchnick suggested the yield component could appeal to financial advisors and institutional investors like insurers and pension funds. “There’s no question that some of the challenge that they’ve had getting over the hump on Bitcoin in the past has been the absence of the yield,” he stated.
The ETF will compete with existing products like the NEOS Bitcoin High Income ETF. Goldman Sachs filed an application for a similar yield-generating product in April.
BlackRock has no current plans to launch a comparable yield product for Ethereum. Mitchnick noted that client demand for Bitcoin-related products remains significantly higher than for other crypto assets.
