New Calamos Bitcoin ETF to use options strategy tied to five major BTC funds

Calamos Investments, an investment firm with over $40 billion in assets under management, has filed for a “laddered” Bitcoin (BTC) exchange-traded fund (ETF) in the United States, tapping into cautious crypto investors seeking exposure to digital asset markets.

The product would add to a growing list of attempts by asset managers to package Bitcoin exposure with built-in guardrails, a response to the cryptocurrency’s volatility. According to a Fidelity analysis, Bitcoin has been three to nearly four times more volatile than major equity indexes. Calamos launched three “protected” Bitcoin ETFs in January.

The new ETF would invest in options contracts that reference against the performance of five Bitcoin ETFs: BlackRock’s iShares Bitcoin Trust; Grayscale’s Bitcoin Mini Trust; the Bitwise Bitcoin ETF; the Fidelity Wise Origin Bitcoin Fund; and the ARK 21Shares Bitcoin ETF.

Options, in general, are investment instruments that give the holder the right but not the obligation to buy or sell an underlying asset before or on a certain date. They are commonly used to mitigate risk and protect against potential losses.

Calamos SEC filing language, detailed

Calamos says its ETF will target downside protection for losses greater than 20%. Aside from options, the fund can invest in cash and US Treasurys, depending on the portfolio management approach used.

“If, for example, the Floor is 20% and the price of Spot bitcoin declines by 8% over a Target Outcome Period, an investor in the Underlying Fund would not receive any protection from the Floor because the decline was not greater than 20%," reads the document. “If, by contrast, the decline of the price of Spot bitcoin over the Outcome Period was 32%, the Floor feature is designed to limit that investor's loss to only 20%."

In January, Calamos launched three “protected” Bitcoin ETFs that have varying degrees of upside potential and downside protection.

Cointelegraph reached out for comment from Calamos, but had not received a reply at time of publication.

Other Bitcoin ETFs’ structure and impact

Bitcoin ETFs generally offer exposure to the world’s largest cryptocurrency by backing the funds with actual Bitcoin. For instance, BlackRock owns 716.5 BTC worth approximately $85.4 billion, according to Arkham Intelligence.

Often, that Bitcoin is stored by custodians, such as when BlackRock contracted with Anchorage for that reason. 

Approved in January 2024, Bitcoin spot ETFs have had a successful Wall Street debut. According to sosovalue.com, the instruments have had a cumulative net inflow of $53.1 billion as of Tuesday. The total net assets held in these funds have reached $150 billion, accounting for 6.5% of the Bitcoin market cap.

The five ETFs that Calamos’s laddered Bitcoin ETF seeks to track have a combined $124.3 billion in assets, or 83.1% of the overall assets in the Bitcoin ETFs.