As a seasoned investor with a penchant for innovation and a knack for spotting trends, I find the recent move by REX Financial to launch a covered call ETF for cryptocurrency stocks an intriguing development. With my background in traditional asset management and a growing interest in digital assets, this seems like a logical next step in diversifying investment opportunities.
In a recent announcement on September 18th, the asset management firm REX Financial unveiled an innovative exchange-traded fund (ETF) that generates income by selling options for cryptocurrency shares.
This REX Crypto Equity Premium Income ETF follows a “covered call” approach, which involves owning a collection of about 25 cryptocurrency stocks and selling options that are slightly above their current market price (out-of-the-money) to generate income from the option premiums.
The ETF holds the stocks in the BITA Crypto Assets & Digital Payments Index, including “those that operate in crypto mining, trading, custody, blockchain technology development, and the creation of digital payment solutions,” REX said.
In simpler terms, “Greg King, CEO of REX, stated that cryptocurrencies are revolutionizing financial systems and they are using their specialized covered call strategy on the industry’s groundbreaking firms.
This year, the BITA index has surpassed 80%, in part due to a rise in crypto-linked stocks following Donald Trump’s victory in the November 5th presidential election.
This is the third Exchange-Traded Fund (ETF) that REX has created, which is based on covered calls. They have previously introduced ETFs focused on Nasdaq and artificial intelligence stocks as well.
Previously, this entity has introduced other Exchange Traded Funds (ETFs) linked to cryptocurrencies. One such ETF is the T-REX 2X Long MSTR Daily Target ETF (MSTU), designed to provide double the daily exposure to MicroStrategy, a well-known Bitcoin (BTC) purchaser.
In simpler terms, options are agreements that give you the opportunity to either purchase or sell a specific asset at a predetermined price in the future, often referred to as “call” or “put” by traders.
Earning money through covered calls involves an agreement to sell a particular asset at a specified price, receiving an initial payment (premium) while potentially missing out on greater profits if the asset’s value increases.
Proliferating crypto ETFs
After Trump, who pledged to make the U.S. a global leader in cryptocurrency, won the U.S. elections, American regulators have become more lenient regarding oversight of digital currencies.
Currently, over half a dozen potential cryptocurrency Exchange-Traded Funds (ETFs) are waiting for regulatory approval to proceed.
As a market analyst, I find myself closely watching the evolution of the cryptocurrency landscape, with a particular interest in Exchange-Traded Funds (ETFs). Following the successful listing of ETFs holding Bitcoin (BTC) and Ethereum (ETH) earlier this year in January and July, respectively, it appears that issuers are now setting their sights on Crypto Index ETFs as the next significant area of focus.
On Dec. 2, Bernstein Research said US ETH ETFs may soon feature staking yield.
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2024-12-04 18:07