Coming in 2025: New ETFs Combining Bitcoin Exposure and Options
Asset management firms have been quick to capitalize on the success of Bitcoin ETFs in 2024, with the latest being Calamos. They are set to launch a new structured protection ETF this month that aims to provide investors with a way to benefit from Bitcoin’s potential gains while also offering 100% downside protection.
This innovative fund will combine options exposure on the Cboe Bitcoin U.S. ETF Index with Treasury holdings, with a goal of being held for 12 months. The exact upside cap will be determined later this month based on options pricing.
This new offering from Calamos is part of a growing trend in the industry to bring a popular equity ETF strategy to crypto investing. Defined outcome products, including buffer funds, have gained popularity in recent years as investors seek new ways to diversify their portfolios and manage risk.
Matt Kaufman, head of ETFs at Calamos, believes that these structured funds can help financial advisors and investors who may be hesitant to dive into Bitcoin due to its volatile history. He sees a potential opportunity for investors to hold the Calamos fund alongside pure-play Bitcoin ETFs.
Other ETF managers, like Innovator and First Trust, are also working on ways to combine crypto exposure with different investment strategies. As the crypto market continues to evolve, more funds are expected to be introduced throughout 2025, especially with a Securities and Exchange Commission that is projected to be more supportive of crypto under the new administration.
The structured nature of these Bitcoin products, like the one being offered by Calamos, will likely look different from traditional buffer funds due to the unique volatility of the crypto market. Investors should keep in mind that because the fund is built through options, selling early could result in less than expected gains from a Bitcoin rally.
While the options market for Bitcoin ETFs is still relatively new, liquidity issues have impacted leveraged funds tied to crypto-related companies. However, Kaufman isn’t concerned about capacity in the options market for the Calamos funds.
With more innovative offerings on the horizon, the world of crypto investing is poised for further growth and development in the coming year. Stay tuned for new products and opportunities as the market continues to evolve.
