Feeling bearish on crypto? There’s now an ETF to quick Coinbase (COIN)—the premiere U.S. trade platform considered as an index for your entire business’s success.
Set to launch on Wednesday, the YieldMax Quick COIN Choice Revenue Technique ETF is designed to “search inverse (reverse) publicity to the share value of the frequent inventory of Coinbase International,” topic to sure limits on funding beneficial properties, in response to its abstract prospectus.
YieldMax is an asset administration firm whose merchandise buy choices contracts based mostly on an underlying safety. As if to mock crypto, the Coinbase-focused ETF will commerce on NYSE Arca below the “FIAT” ticker.
“The fund’s potential for beneficial properties from decreases within the share value of COIN’s inventory is restricted,” the submitting reads, noting that the fund “is not going to absolutely profit” from any important drawdown in Coinbase’s inventory value.
YieldMax™ Quick COIN Choice Revenue Technique ETF $FIAT launching tomorrow, 7/10.$FIAT supplies quick publicity to #Coinbase and goals to generate month-to-month earnings from a #coveredputselling technique on $COIN.
See particulars under and @ https://t.co/GkowckHOU8 https://t.co/ehE5cWLplU pic.twitter.com/HYvSSFeRA3
— YieldMax ETFs (@YieldMaxETFs) July 9, 2024
The ETF will function utilizing a “artificial coated put” writing technique, incorporating numerous shifting components to each present oblique inverse publicity to Coinbase inventory, whereas additionally producing passive month-to-month earnings regardless of Coinbase’s efficiency.
This entails concurrently shopping for put choices and promoting name choices for COIN inventory, a apply that replicates inverse publicity to Coinbase’s inventory actions. The fund may also promote short-dated put choices on the identical inventory with a strike value 0%-15% under present costs, on which it’ll generate earnings.
“If the underlying safety’s share value decreases past the strike value… the fund will lose cash on these quick put positions, and the losses will, in flip, restrict the beneficial properties of the fund’s artificial quick publicity,” the submitting warned.
In latest occasions, shorting COIN hasn’t been a sensible transfer for long-term buyers. The inventory is up 171% over the previous yr and 43% yr to this point, exhibiting relative stability throughout Bitcoin’s important correction all through the previous 5 weeks.
YieldMax’s product joins a wave of more and more subtle Wall Road merchandise rising round crypto for the reason that daybreak of Bitcoin spot ETFs in January. Weeks after their launch, Roundhill launched its Bitcoin Lined Name Technique ETF which used related choices preparations to generate a 30% annualized yield for buyers on its opening day.
Edited by Ryan Ozawa.