Grayscale, the world’s largest digital asset-focused investment platform, today announced the launch of its latest exchange-traded fund (ETF), Grayscale® Ethereum Covered Call ETF (Ticker: ETCO) (the “Fund”).
As the second largest investable opportunity in crypto by market cap, Ether represents a compelling diversification play for many investors in digital assets. The Fund is Grayscale’s newest ETF offering a covered call writing strategy, designed to provide investors exposure to Ether’s volatility characteristics as a unique source of potential income.
Grayscale Launches Ethereum (ETH) Covered Call Options ETF
Grayscale Investments announced on Thursday the launch of the Ethereum Covered Call ETF (ETCO), a fund designed to generate income by writing call options on exchange-traded products (ETPs) tied to Ether.
The new ETF is actively managed and will distribute income to shareholders on a bi-weekly basis. Krista Lynch, senior vice president for ETF capital markets at Grayscale, said the product was created to add “an income component” for investors already holding Ethereum exposure.Â
ETCO’s stated objective is to prioritize current income while also aiming to capture some of Ether’s price movements. Rather than investing directly in ETH, the fund sells call options on vehicles such as the Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH).
By writing options close to market prices, ETCO collects premiums that may help mitigate volatility during downturns but cap potential gains during rallies. The fund charges an expense ratio of roughly 0.66%, according to Bloomberg, and commits to maintaining at least 80% of assets in derivatives tied to Ethereum ETPs.
The strategy is intended to provide cash flow through premiums collected on these contracts, though it also limits upside during rallies. Grayscale noted that ETCO joins its broader suite of income-oriented funds, which includes the Bitcoin Covered Call ETF (BTCC) and the Grayscale Premium Income ETF (BPI).
Grayscale, which has been registered with the US Securities and Exchange Commission as an investment adviser since 2022, emphasized that ETCO will not invest in digital assets directly but will rely on options contracts tied to ETPs. The fund is advised by Grayscale Advisors, LLC and distributed by Foreside Fund Services, LLC.
Recently, Grayscale Investments filed a registration statement with the U.S. Securities and Exchange Commission that aims to convert its existing Avalanche Trust into a publicly traded spot ETF on Nasdaq, providing regulated exposure to AVAX, the native token of the Avalanche blockchain, according to the S-1 filed on Aug. 22.
