Matt Kaufman Discusses Calamos' Bitcoin Suite at Exchange

Nicholas Wodeshick: It’s likely safe to say bitcoin’s price has been more volatile this year than some investors may have expected. Do you still think there’s a good use case for staying engaged with the currency in your portfolio?

Matt Kaufman: It’s been more a return to the norm for bitcoin. We had a bull run after the spot bitcoin ETFs launched. It’s historically a 60/70 vol asset, and we’re seeing that volatility return.

But yes, I think it makes sense to own bitcoin in a portfolio. There’s diversification reasons in favor of doing that, but I think you have to own it in a risk-managed way. If you look at some of the leading state leading research, the suggestion is to sell some Mag Seven exposure to get 1-2% bitcoin exposure. And anything over that is going to wildly add volatility to your portfolio. From my perspective, I don’t know any advisor that just has those Mag Seven stocks laying around to turn in. Usually, you have to sell off some Q’s or something similar to actually get there.

Kaufman: From our perspective, we think a better way to do that is through protected bitcoin. We launched three versions: 100% protection, 90% protection, and 80% protection. That gives you the upside to a cap over one-year outcome periods.

We built protected bitcoin with three different floors, much like a safety net. You can get a 0% floor, 10% floor, 20% floor. And then you have upside that just goes up with how much you’ve put at risk. If you put 0% at risk, your cap rate is around 12%. 10% at risk, your cap rate sits around 30%. And then 20% at risk, your cap rate is more like 50% to 55% so really strong upside.

Now we’ve provided a traditional framework for bitcoin. So maybe you’re moving your equities, like selling SPY or Q’s, and moving that into the 20% floor. That’s going to look a lot more like an equity product. Alternatively, maybe it’s safer money, such as bonds or cash, that you can now tie to bitcoin. You get the upside of bitcoin to 12%. That’s about three times what you’re going to get from the risk-free rate.

Wodeshick: Let’s focus on these three funds for a moment. What advice would you have for advisors and investors trying to choose one ETF to add to their portfolio?

Kaufman: It depends on where you are in your bitcoin adoption curve, along with your risk appetite. It’s a bit of a mind bender, but we’ve seen some people tie their safer money to bitcoin. For instance, CBOJ’s cap sits around 12%. How often does bitcoin capture 12%? Sometimes it does it in a day. As such, there’s usually the surface question, which is, why would you ever give up all your upside for 12%? Well, the other way to think of it is now, why not tie your safe money to bitcoin. And you can actually get a much better return than you’d traditionally get from a risk-free product?

That’s one way to think about it. Some people might be moving equities in. If you’re more of an aggressive investor or even just an investor who wants to tie themselves in an equity-like way, they’re moving into the 20% floor with CBTJ. The other way to think about it is, if you already have bitcoin exposure, now you can just dial up or down how much you want. Maybe you want 20% less risk. So just move 20% into CBOJ, the 100% protection fund. Now you’ve created 20% less downside, which you’re capturing 80% of the upside. With these funds, you can almost choose your own adventure as it relates to bitcoin exposure.

Wodeshick: So you see a use case for employing these Calamos funds to help existing crypto investors hedge their risk?

Kaufman: I think there’s bitcoin millionaires who’ve been invested in bitcoin for more than a decade. And you know, they’re older now, maybe they started a family. They all made a bunch of money; good job. But now it’s time to take that asset block and protect it.

We’re not expecting you to sell off all your bitcoin exposure, but take some of that money and put it in the protective version. You still get a really strong upside, and that can take you into the future. Whether it’s starting a family or a business, you actually need some protection for the asset growth that you have.

Wodeshick: Given the security that these ETFs offer, they seem like good choices for those looking to dip their toe into bitcoin. Are you viewing these funds as a good vehicle to begin building bitcoin exposure?

Kaufman: Absolutely. We view our ETFs as a bridge into bitcoin or crypto as a whole for a lot of people. Not just for individual investors, but for platforms as well. A lot of financial advisory platforms are just now working out their bitcoin policies. Are they going to allow spot bitcoin, and for the risk committees we can get in front of, they really like the protected versions. That serves as a really good bridge for even those platforms to now give people bitcoin exposure, but in a way that’s not going to potentially blow up the investor or the client or the advisor. They can gain access to bitcoin in a more prudent way, which is often what they’re looking for.

For more news, information, and analysis, visit the Crypto Channel.

The information in each of the Calamos Bitcoin 90 Series Structured Alt Protection ETF® – January (CBXJ) and Calamos Bitcoin 80 Series Structured Alt Protection ETF® – January (CBTJ) prospectuses and statements of additional information is not complete and may be changed. We may not sell the securities of either fund until such fund’s registration statement filed with the Securities and Exchange Commission is effective. Each fund’s prospectus and statement of additional information is not an offer to sell such fund’s securities and is not soliciting an offer to buy such fund’s securities in any state where the offer or sale is not permitted.

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The Funds seek to provide investment results that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant (“BRRNY”) (“Spot bitcoin”) up to a predetermined upside cap (the “Cap”) while seeking to protect against 100%, 90% or 80%, respectively, of losses (before total fund operating fees and expenses) of Spot bitcoin over a period of approximately one (1) year (the “Outcome Period”). The Funds will not invest directly in bitcoin. Instead, the Funds seek to provide investment results that, before taking total fund operating fees and expenses into account, track the positive price return of Spot bitcoin by investing in options that reference the price performance of one or more underlying exchange-traded products (“Underlying ETPs”) which, in turn, own bitcoin and/or one or more indexes that are designed to track the price of bitcoin (“Bitcoin Index”).

The Target Outcome may not be achieved, and investors may lose some or all of their money. The Funds are designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds a Fund until the end of the Outcome Period. While the Funds seek to provide 100%, 90% or 80% protection against losses experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee a Fund will successfully do so. If a Fund’s NAV has increased significantly, a shareholder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in the Funds is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection and Cap will be successful, and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.

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Digital Assets Risk: The Bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin network is the most established digital asset network, the Bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs’ shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs’ shares.

Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks, including authorized participation concentration risk, underlying ETP risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, concentration risk, clearing member default risk, correlation risk, costs of buying and selling fund shares, counterparty risk, derivatives risk, equity securities risk, FLEX options risk, interest rate risk, investment in a subsidiary, investment timing risk, liquidity risk, management risk, market maker risk, market risk, new fund risk, non-diversification risk, options risk, OTC options risk, position limits risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, U.S. Government security risk, U.S. Treasury risk, and valuation risk. For a detailed list of Fund risks see the prospectus.

100%, 90% or 80% capital protection is over a one-year period before fees and expenses. All caps are predetermined.

Cap Rate – Maximum percentage return an investor can achieve from an investment in a Fund if held over the Outcome Period.

Protection Level – Amount of protection a Fund is designed to achieve over the Days Remaining.

Outcome Period – Number of days in the Outcome Period.

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