Grayscale has announced the launch of its Ethereum Covered Call ETF (ETCO), designed to give investors exposure to Ethereum (ETH) while generating income from its volatility. The fund’s main objective is to provide current income, with a secondary goal of capturing returns linked to ETH.
According to Grayscale, the ETF will use a covered call writing strategy on Ethereum-based exchange-traded products (ETPs). By systematically writing call options near current ETH spot prices, the fund seeks to capitalize on ETH’s price swings and distribute the income generated back to shareholders.
Krista Lynch, Grayscale’s Senior Vice President of ETF Capital Markets, explained that the ETF is intended to complement existing Ethereum exposure by adding an income component. She emphasized Grayscale’s mission to offer investors innovative, outcome-driven solutions that adapt to their diverse goals and needs.
The new ETCO ETF joins Grayscale’s portfolio of income-focused products, including the Bitcoin Covered Call ETF (BTCC), which uses a similar strategy on BTC. Additionally, ETCO may invest in options tied to Grayscale’s Ethereum Trust ETF (ETHE) and its Ethereum Mini Trust ETF (ETH). Currently, these funds are among the largest ETH investment vehicles, holding $4.80 billion and $3.18 billion in assets, respectively.
This launch comes at a favorable time for Ethereum, as the asset has staged a strong comeback in recent months. Over the past 90 days, ETH has climbed more than 77%, and it is up 21% in the last month. With expectations of a potential Fed rate cut at the upcoming FOMC meeting, Ethereum could continue to see upside momentum, further boosting interest in Grayscale’s latest product.
