Today, First Trust launched the FT Vest Bitcoin Strategy & Target Income ETF (DFII).
DFII’s investment goal is to seek income, with a secondary goal of partial participation in bitcoin returns. The Fund operates with a net expense ratio of 85 basis points.
Notably, DFII’s strategy does not involve direct investment in the cryptocurrency. Instead, the lion’s share of DFII’s net assets are utilized towards investments that provide income, bitcoin exposure, or both.
Accessing Bitcoin Through Options
DFII employs an options strategy to build income and gain exposure to bitcoin price returns. This is done through a mix of FLEX Options and over-the-counter options, among others. These options traditionally use bitcoin ETPs or ETP indexes as their reference assets.
To help bolster the fund’s overall income, DFII looks to employ a partial covered call strategy. This strategy sees the fund selling call options either at-the-money or at the approximate value at the time of the fund’s inception.
While options strategies may limit DFII’s engagement in bitcoin price rallies, they offer many other benefits. Along with income potential, a strong options overlay can help a portfolio achieve a more attractive risk profile.
DFII comes online at a moment in which interest is building over both cryptocurrency and options strategies. Given the turbulent nature of the U.S. market, some advisors and investors are turning to options strategies as an alternative method for building income.
Meanwhile, the price performance of bitcoin remains a highly debated topic within the investment community. Advisors and investors willing to bet on bitcoin in 2025 could very well see significant income down the line.
With over 30 ETFs listed in the United States, First Trust offers a number of compelling ETFs for the investment community. This includes the timely FT Vest U.S. Equity Buffer ETF – April (FAPR ), which has over $700 million in assets under management.
For more news, information, and analysis, visit the ETFDB.