Blackrock's BITA Covered Call Strategy Unveiled with 0.65% Fee

Blackrock's Ishares Bitcoin Premium Income ETF has taken another step towards launching its covered call strategy tied to IBIT shares. The fund aims to give investors exposure to bitcoin while generating income through the sale of call options. According to a recent filing with the U.S. Securities and Exchange Commission, the trust will earn premium income by actively selling call options primarily on shares of Blackrock's Ishares Bitcoin Trust (IBIT). The latest amendment disclosed a 0.65% sponsor fee, which is higher than Blackrock's spot bitcoin ETF but lower than the two largest covered call ETFs.

The fund's structure places it in the growing category of covered call funds, products that trade some upside potential for regular income. In practice, BITA will collect option premiums by selling calls linked to bitcoin exposure. If bitcoin rises sharply, the strategy may limit some gains. If markets trade sideways or remain volatile, the option income could become more attractive.

Eric Balchunas, Bloomberg Senior ETF Analyst, expects the product to launch 'very soon', noting that Blackrock may be looking to reach the market before Goldman Sachs, whose competing product is expected to become effective around July 1.