IBIT: DIY For A Simple Income Stream And Manage Your Own Total Return

Summary iShares Bitcoin Trust ETF is rated a BUY for investors seeking long-term exposure to Bitcoin's secular growth and digital currency ￰0￱ offers simplicity, high liquidity, and lower expenses compared to option income ETFs, making it an attractive core holding for Bitcoin ￰1￱ covered calls directly on IBIT can generate substantial income (estimated 30-40% annually) and provides greater flexibility than option income ￰2￱ include Bitcoin's inherent volatility and potential regulatory or geopolitical challenges, but IBIT remains well-positioned for bullish digital finance ￰3￱ are opportunities to earn income from the trending cryptocurrency ￰4￱ option income ETFs are among the ones that many investors are interested in.

However, if one can spend some time in the crypto market, such as checking and comparing the various options, a simple DIY could not only save a lot of time in research but also get good insight and play more ￰5￱ Bitcoin Trust ETF ( IBIT ) is a good alternative to consider as the core holding, as it represents one of the largest Bitcoin ETFs. I rate it a BUY for investors who want to ride off the long-term digital currency trend. I will also show below that a simple selling call strategy on IBIT would be more effective to retrieve income and better manage the underlying crypto ￰6￱ Overview IBIT is the largest ETF for Bitcoin available at the ￰7￱ ETF is managed by ￰8￱ following is a well-summarized description of the ETF Bitcoin ￰9￱ enables investors to get exposure to bitcoin through the convenience of an exchange-traded product, helping remove the operational, tax, and custody complexities of holding bitcoin ￰10￱ portfolio is very simple, as shown below: BTC Portfolio (iShares) The ETF was incepted on January 05, 2024, and is still a pretty new ￰11￱ the other hand, IBIT has amassed a total of $85 billion AUM with a massive volume of over 30 million in recent ￰12￱ expense ratio is 0.25% which is a bit high considering the ETF has perhaps the simplest portfolio to ￰13￱ following shows the volatility of the ￰14￱ 52-week historical volatility reached a high of 43, while the more recent volatility is much lower at around ￰15￱ Volatility Metrics (marketchameleon.

com) The downward trend of the volatility is an encouraging sign for the Bitcoin market, which has been known to be very ￰16￱ lower volatility indicates more confidence that investors have given to Bitcoin and the whole cryptocurrency market in recent ￰17￱ Market Showing A Strong Secular Growth Trend Investors have increasingly noticed that the major attention has been given to the Crypto market in ￰18￱ are many new developments pointing to strong secular growth opportunities that may exist in the ￰19￱ see some noticeable catalysts, including the institutional adoption, regulatory clarity, and continued technological innovation in tokenization and AI.

Especially, we are in a time when the AI killer APPs are desperately wanted, given the huge capex spending on the datacenter has been put in ￰20￱ is worth emphasizing that the integration of AI and blockchain is emerging as a key trend for AI ￰21￱ specifically, AI is used for use cases like enhanced trading strategies and smart contract automation, while on the other hand, decentralized AI projects would allow more open and equitable AI ecosystems to be developed and grow fast. I think these AI-related growth opportunities may be somewhat overlooked due to the red-hot GenAI that has been grabbing most of the ￰22￱ as mentioned in WSJ recently, the crypto market itself would benefit and accelerate tremendously from the new technology, such as digitalization and ￰23￱ mentioned before, the astonishing growth history of IBIT ETF in less than two years is a strong market verdict and a big confidence vote on the Bitcoin future ￰24￱ and Total Return Should Be an Investment Focus The following is a list I have pulled out from my recent coverage in SA of the Bitcoin option income ￰25￱ that due to the high volatility, which makes the option premium rich, these funds are all paying the very high yields ranging from 26.5% to over 100% as listed ￰26￱ income should be a key focus for many investors as it helps to see immediate profit and gain more confidence in investing in Bitcoin.

However, these ETFs, based on writing covered calls, all suffer from the capped-gain limitation and may not produce the kind of total return that investors might be looking ￰27￱ investors and analysts may attribute it to the "NAV erosion". It may not be totally correct to call it NAV erosion for an option (covered call, aka CC) strategy, which may suffer from the gain limitation by the designed target price of its CC rule. However, the expense ratios are noticeably high, and these will significantly reduce the total return over the long ￰28￱ that all these ETFs post very similar expense ratios close to 1% regardless of the fund sizes and yields, which vary ￰29￱ Option Income ETFs (Author Using SA Data) It Is Not Hard for DIY I have been doing DIY to generate income streams using options strategies such as selling covered calls and the option ￰30￱ may have noticed some mentions in my previous ￰31￱ of the key points related to IBIT ETF to keep in mind is that, for such a secular growth play with high volatility, using option ETFs is a much less efficient method for total ￰32￱ following summarizes some challenges investors may face with Bitcoin income ￰33￱ are many ETFs to choose ￰34￱ investors would have to spend a lot of time understanding and monitoring the ￰35￱ is an extra effort on top of understanding the asset class, trend, investment thesis, ￰36￱ and analyzing the (option) income ￰37￱ would not only require investors to get a grip on complex options and strategies, but also many may appear very confusing, such as futures index options vs.

a different underlying that is a non-futures index, ￰38￱ that charges (expense ratios) are high, investors tend to pay more attention to the high yields, which could offset the high expenses on ￰39￱ high yields typically come from being close to the strike prices; this is when the capped gain would be more easily hit, severely limiting the price upside potential and jeopardizing the total ￰40￱ different DRIP choices with the ultra-high yield ￰41￱ direct reinvesting in the fund itself may not be economical due to the high ￰42￱ in the underlying portfolio may seem to be a good choice for growth, but typically, it will not create the yield. I view selling covered calls directly on IBIT as the simplest way to generate ￰43￱ approach would address all the challenges mentioned above based on my ￰44￱ saves me a lot of time and gives me investment and trading flexibility as ￰45￱ example, I don't have to sell calls during a bull run to keep the price gain going without any capping effect.

I actually only need to focus on one setup of the Bitcoin exposure to work ￰46￱ following is a portion of the monthly (October) option chain for ￰47￱ can see that option trades are pretty active with very reasonable bid-ask ￰48￱ I set up a sale on a call of $65 price and collect a $2.13 premium, this will give us about 3.2% income. Similarly, a call of $66 price will offer 2.5% ￰49￱ of today, we are a bit short of one month, so the call for a full month may be worth more (a week of time premium). Now linearly adding the total for 12 months would roughly give me a yield of about 30%-40% on an annual ￰50￱ that with the option price target at $66, there is also about a 2.5% gain from today's ETF price that is allowed for the price ￰51￱ Option Chain Snapshot (SA) To summarize it simply, I can set up an auto-trading procedure using a 2.5% price gap for the strike price and selling the covered call for about 2.5% monthly ￰52￱ DIY process is simple and easy enough to save me a lot of time, and more importantly, the near-1% expense ratio I would have to pay for the corresponding option income ￰53￱ there is not a lot of effort involved ￰54￱ more engaging investors, there are many choices to select strike prices and the times to sell (such as weekly calls or not to sell CC for a certain period).

Investors can navigate the price trend and optimize their income and gain based on their own risk and reward ￰55￱ Analysis The risk for the bullish Bitcoin thesis is the uncertainty about how long the secular growth trend will ￰56￱ growth may depend on a few ￰57￱ political and perhaps geopolitical factors are the important ￰58￱ may not be favored by all parties and countries ￰59￱ could prefer their own fiat currency or stay with ￰60￱ digitalization of currency may move slowly or even stall at a certain ￰61￱ would affect the demand for Bitcoin and may cause IBIT to perform ￰62￱ volatility of the IBIT is still pretty high, which represents a concern about Bitcoin's growth to a certain ￰63￱ should monitor the Bitcoin volatility very ￰64￱ Thoughts The Bitcoin outlook is quite bullish thanks to the role Bitcoin will be playing in the digitalization of currency and digital finance as a ￰65￱ is the largest Bitcoin ETF and is expected to continue to offer market-matching performance.

I recommend a BUY rating for investors who want to play this Bitcoin long-term ￰66￱ emergence of Bitcoin option income ETFs is strong evidence showing the high interest from investors and market attention to Bitcoin's growth ￰67￱ investors could consider some simple DIY steps to sell covered calls to create their own (customized) income streams, which would be more efficient and profitable than investing in some option income ￰68￱ those investors who understand the related option strategies and the structures of those option income funds, IBIT has a huge option market, which the interested investors can take advantage of.