Grayscale files updated prospectus for its Bitcoin Covered Call ETF

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Grayscale Investments has filed an updated prospectus for its Bitcoin Covered Call ETF, just a day after the Options Clearing Corporation (OCC) cleared the path for the launch of Bitcoin ETF options, according to Bloomberg ETF analyst James Seyffart.

The fund, first proposed on January 11, will provide investors with exposure to the Grayscale Bitcoin Trust and Bitcoin, while implementing a strategy that involves writing and/or buying options contracts on Bitcoin exchange-traded products (ETPs) to generate income, Seyffart explained.

“The Fund seeks to achieve its investment objective primarily through actively-managed exposure to Grayscale Bitcoin Trust (BTC) (“GBTC”) and the purchase and sale of a combination of call and put option contracts that utilize GBTC as the reference asset,” the prospectus wrote.

Grayscale’s move comes at a time when interest in Bitcoin ETFs is surging after the SEC greenlit multiple spot Bitcoin ETFs earlier this year.

Major exchanges including Cboe, the New York Stock Exchange (NYSE), and Nasdaq have submitted rule change proposals to list options on spot Bitcoin ETFs, with Nasdaq specifically targeting options listings for BlackRock’s iShares Bitcoin Trust (IBIT).

The SEC approved options trading for IBIT in late September, and the OCC’s clearance on Monday enabled IBIT options to begin trading today.

$IBIT options up and ready for action on the terminal via OMON<go>. New era begins today. Will these break newborn records too? I'm going to go with probably yes. pic.twitter.com/ZskJUqBKCg

— Eric Balchunas (@EricBalchunas) November 19, 2024

Options contracts provide investors with the right, but not the obligation, to buy or sell an asset at a predetermined price within a specific timeframe, commonly used as risk management tools.

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