Bitcoin continues to gain ground, erasing losses over the last two months as it nears $97,000 once more. The NEOS Bitcoin High Income ETF (BTCI) offers enhanced opportunities for bitcoin investors, putting volatility to work for income.
The world’s largest cryptocurrency, bitcoin has proven increasingly popular as market volatility and U.S. economic uncertainty spikes. Though prices plummeted when tariffs went into effect, they’ve since recovered to mid-February levels, close to $97,000 as of Thursday afternoon.
Investors now have a number of ways to access bitcoin, including directly, or via spot ETFs. BTCI takes bitcoin investing one step further, offering synthetic exposure to bitcoin while also capitalizing on the inherent volatility in the asset class through covered calls.
Although volatile, BTCI offers a somewhat smoother ride than direct bitcoin investment. And year-to-date, it actually offers better total returns, as of April 30, 2025, according to Y-Charts data. BTCI is up 2.71% YTD compared to bitcoin’s 1.74% total return (measured using BTCUSD).
The fund currently offers an impressive 30.88% distribution rate as of March 31, 2025. A forward-looking metric, distribution rate annualizes the most recent distribution and then divides it by NAV at time of distribution. It’s what investors would earn should distributions remain the same over the next year.
The fund invests in bitcoin futures ETFs and options contracts that use BTC futures ETFs for their reference asset. This creates synthetic exposure to BTC through BTC futures, while also writing covered call options on BTC futures ETFs to generate high monthly income. The strategy uses a rules-based, systematic, proprietary model to determine its options positions.
Covered call options entail buying an asset while also writing a call on the underlying asset. This generates a premium, but also caps the upside potential, should the underlying asset appreciate. Options strategies like BTCI often benefit from volatility, earning higher premiums on call writing (and thereby income) when volatility spikes. Given bitcoin’s enhanced volatility, it could prove an attractive source of additional income for BTC investors.
The fund’s managers may also engage in tax-loss harvesting to capture losses in order to offset gains made.
BTCI has an expense ratio of 0.98%.
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