BITO - BITO: Ideal For Bitcoin Options Trading Avoid Otherwise

2024-04-24 10:14:04 ET

Summary

• The ProShares Bitcoin Strategy ETF invests in Bitcoin futures, not Bitcoin itself. For this reason, it is not recommended for long-term Bitcoin investors.
• BITO's expense ratio is higher than that of other Bitcoin ETFs, but this can be justified by its futures trading strategy and the monthly yield it offers.
• The only reason to invest in BITO today is for trading options on Bitcoin, as other Bitcoin ETFs do not currently offer option contracts.
• This article describes a potential strategy for option play with BITO and goes into some of the specifics of BITO option contracts.

The ProShares Bitcoin Strategy ETF ( BITO ) is an ETF that invests in Bitcoin Futures, financial contracts that obligate the buyer to purchase, and the seller to sell, a specific amount of Bitcoin at a predetermined price on a specified future date. Due to its unique strategy of settling futures for cash, the BITO ETF offers a monthly distribution, currently of about 16%.

The BITO ETF does not invest directly in Bitcoin, contrary to Bitcoin ETFs such as the iShares Bitcoin Trust ETF ( IBIT ) or the Fidelity Wise Origin Bitcoin Fund ETF ( FBTC ), which I covered in a recent article about the best Bitcoin ETFs....

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