- May 28, 2024
- Posted by: Mark S
- Categories: Cryptocurrencies, Trading Article
Imagine owning the best-performing asset class of the last decade, generating monthly passive income simultaneously. Sounds too good to be true?
With the rise of Bitcoin and cryptocurrency Covered Call ETFs, this dream can become a reality.
Bitcoin’s Dominance:
- Bitcoin has outperformed stocks, gold, and real estate over the last 10 years.
- Its market cap has soared to $1.3 trillion (Forbes) and continues to grow rapidly.
- The entire cryptocurrency space is projected to reach $10 trillion in the coming years.
How would you like to have exposure to Bitcoin and cryptocurrency, the top-performing asset class, but also generate monthly passive income simultaneously?
Using brand new Covered Call ETFs you can.
LIVE Passive Investing Workshop: Reserve your virtual seat here.
How It Works: Covered Call ETFs Simplified
Covered Call ETFs are a unique investment vehicle that combines the benefits of holding cryptocurrency-related assets with the income-generating potential of options trading.
These ETFs operate similarly to a rental property, where you collect monthly rent as a steady income stream.
Here’s how they work:
- The ETF holds cryptocurrency-related assets or derivatives, such as Bitcoin, and Ethereum, or shares of companies like Coinbase or MicroStrategy, which have significant exposure to cryptocurrencies.
- The fund manager then sells covered call options on these assets. A covered call is an options strategy where the ETF sells the right to buy its underlying assets at a specific price (strike price) within a certain timeframe.
- In exchange for selling these options, the ETF receives option premiums, which are distributed to investors as dividends. These premiums provide a regular income stream, often every month.
For example, let’s say a cryptocurrency ETF holds 100 shares of Coinbase stock (COIN) trading at $300 per share. The fund manager might sell a covered call option with a strike price of $320 expiring in one month. If the option premium is $5 per share, the ETF would receive $500 (100 shares x $5 premium), which would be distributed to investors as dividends.
This strategy generates income through option premiums, which are distributed to investors as dividends.
The potential yield from these covered call ETFs can be attractive, often ranging from 5-10% annually, depending on market conditions and the specific ETF strategy.
For passive income investors seeking Bitcoin exposure without having to deal with exchanges, Bitcoin Exchange Traded Funds (ETFs) offer an attractive solution.
Why Consider Bitcoin & Cryptocurrency-based ETFs?
1. Ease of Investment
- Simple Setup: Purchase these ETFs through your regular brokerage account.
- Professional Management: Experienced fund managers oversee the ETFs, ensuring strategy adherence and security.
2. Passive Income Generation
- Covered Call Strategy: Generating regular monthly income in most cases.
- Monthly Distributions: You can capture some of the upside AND generate income.
3. Streamlined Bitcoin Exposure
- No Need for Complicated Hardware Wallets: Invest like a traditional stock without needing to handle cryptocurrency wallets or exchanges.
- Market Liquidity: These ETFs are traded on major exchanges, offering high liquidity for buying and selling shares.
Bitcoin & Cryptocurrency ETFs Suitable for a Passive Income Strategy
Risks & Downsides
Any of these assets can go down in price. And it’s a highly volatile asset class. While the monthly income will offset some modest declines, if this asset class sees drops in line with historical cycles, it would be well beyond the income created in distributions.
While it may perform better to the downside, the best way to capitalize on these cash-flowing investments is to be in the market during the bull market cycles and out of the market during the bears.
We utilize our Market Timer strategy on every covered call ETF trade.
Knowing when to exit is essential.
We’ll share the complete details with you during our live webinar. Click the button below and get yourself registered and learn how you can capitalize on this unique opportunity while protecting yourself during the inevitable downturns:
