Summary YBTC is an offering in the Bitcoin space that seeks to generate a weekly distribution for its investors. It generates this weekly distribution through writing options on ETFs and indexes that have exposure to BTC. The fund provides a massive distribution yield, but its relatively lower-yielding peer wins again on the total return front thanks to a more flexible strategy. Written by Nick Ackerman, co-produced by Stanford Chemist The Roundhill Bitcoin Covered Call Strategy ETF ( YBTC ) is a fund focused on investing in Bitcoin ( BTC-USD ) exposure but then providing an 'income' to investors. BTC is normally a non-cash-producing asset, meaning the distributions that YBTC pays are generated through writing calls on an underlying index that has BTC exposure. They also provide long exposure to BTC through writing options as well, creating a synthetic long position. In this space, we covered two other funds previously: YieldMax Bitcoin Option Income Strategy ETF ( YBIT ) and NEOS Bitcoin High Income ETF ( BTCI ). Our most recent coverage was YBIT, which I compared to BTCI, and it came out that BTCI looked like the much better fund between the two. YBTC Basics Dividend Frequency: Weekly Dividend Yield: 2.89% SEC yield, 49.1% Distribution Yield Expense Ratio: 0.96% Leverage: N/A Managed Assets: $254.28 million Structure: Active ETF The fund's investment objective is to "provide current income on a weekly basis while also providing exposure to the price of Bitcoin ETPs." From the prospectus , here is how the fund will attempt to achieve its investment objective: The Fund seeks to achieve its investment objectives through the use of a synthetic covered call strategy that provides current income on a weekly basis, while also providing exposure to the price return of one or more exchange-traded funds (“ETFs”) that hold bitcoin and whose shares trade on a U.S.-regulated securities exchange (each, a “Bitcoin ETF,” and collectively, the “Bitcoin ETFs”). In effectuating its investment strategy, the Fund will purchase and sell a combination of call and put option contracts that utilize a Bitcoin ETF or an index of Bitcoin ETFs (the “Bitcoin ETF Index”) as the reference asset (“Bitcoin ETF Options”). The Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in Bitcoin ETF Options. For purposes of compliance with this investment policy, derivative contracts will be valued at their notional value. The Fund’s sale of call Bitcoin ETF Options (“Bitcoin ETF Call Options”) to generate income will potentially limit the degree to which the Fund will participate in any gains experienced by the Bitcoin ETFs. The Fund does not invest directly in bitcoin. As they emphasize in the objective, the fund is not carrying any direct exposure to BTC. In fact, they aren't even carrying any indirect exposure to BTC through an ETF, as they only utilize options. With the construction of this portfolio only including options to create exposure, this is similar to YBIT. Neither of these funds invests in BTC through some ETF exposure. BTCI, on the other hand, does carry some exposure through the VanEck Bitcoin ETF ( HODL ). YBTC Holdings ( Roundhill ) In doing that, it creates a synthetic long position. However, as they noted in their prospectus and we can see above, the fund is also long exposure through long calls. At this time, it is the CBTX, which is the CBOE Bitcoin U.S. ETF Index. The Fund’s synthetic exposure to Bitcoin ETFs is achieved through the combination of purchasing call options and selling put options generally at the same strike price which synthetically creates the upside and downside participation in the price returns of a Bitcoin ETF or an index of Bitcoin ETFs. The Fund will primarily gain exposure to increases in value experienced by the Bitcoin ETFs through the purchase of Bitcoin ETF Call Options. When looking at total AUM, YBTC launched on January 18, 2024, and has garnered a rather sizeable ~$254 in assets. That made it come before YBIT, which launched on April 22, 2024, and that fund currently sits at $143.68 million AUM. However, impressively, BTCI launched on October 17, 2024, and that fund has managed to garner $486.9 million in total assets. Performance Comparison In this space, it seems like there is a growing interest, as YBTC was another suggestion from a reader to cover. I know my preference in exposure to the Bitcoin asset is from these funds that pay distributions as well. There are drawbacks to going via call writing funds or even funds that invest in BTC futures, such as ProShares Bitcoin ETF ( BITO ). One of the main ones is that there is upside cap potential when writing calls; it depends on how overwritten a fund is and how far out-of-the-money a fund is overwritten. With these funds, this is where the management has some flexibility. The more overwritten a portfolio is during a strong upward move, the more restricted the fund could be in participating in the upside moves. This occurs if the underlying index rises sharply and breaches the short call strike price that is selected. At the time of writing in the above holdings, they are short the CBTX 08/08/2025 $2757 Calls and the iShares Bitcoin Trust ETF ( IBIT ) 08/25 $66. Currently, CBTX is trading at $2675, and IBIT is at $64.22. Should the prices rise above those strikes selected above, the fund could start to generate losses. This can occur when they go to roll the trade, and the premium to close out the trade is more than they originally received when writing the calls in the first place. Breakeven when writing covered calls is the strike price plus the premium received. With that said, seeing some lagging performance relative to a straight ETF like HODL is expected when there is a strong upward trend. That can make it more appropriate to measure its track record against its peers, such as YBIT and BTCI. In doing that, YBTC does much better than YBIT but has still lagged BTCI, as that fund comes out on top once again. YCharts Despite the lagging results relative to HODL, at the same time, I know when I'm getting a monthly or weekly distribution that those are 'guaranteed' returns in the fact that the cash can't be taken back once paid—even if the underlying were to go to $0. Perhaps that isn't the most logical way to approach the investment, but in my mind, with such a volatile asset, I don't mind trimming some upside profits for taking some gains along the way. Now, I don't necessarily believe that BTC will ever go to zero. I believe it has been around long enough now that it has staying power. Still, I think that there are regulatory risks that could severely restrict its appeal, including making it outright illegal, as some countries have. I'm not sure if that will ever happen in the U.S., but I don't think it could be ruled out that the U.S. creates its own digital tokens and then restricts BTC. Massive Distribution Paid Weekly Perhaps one of the more appealing aspects of YBTC and several of the Roundhill funds is that they've begun offering weekly distributions to their investors. YBTC Distribution History ( Roundhill ) With BTCI and YBIT, one is receiving a distribution monthly, which is often frequent enough for most investors—including income-focused investors. However, a weekly distribution has a slight advantage for those investors who are reinvesting, as it compounds ever so slightly faster. Over shorter periods of time, it wouldn't be noticeable, but over years and decades, it would end up being meaningful. When discussing BTCI and YBIT, we also highlighted that the reason the distribution rates can be so high for these funds is the significant implied volatility that the underlying ETFs/Indexes have that are focused on Bitcoin. It's a volatile asset, and that means the premiums received need to be higher to compensate for that greater risk. For example, the August 15, 2025, CBTX options are showing implied volatility of around 36%. CBTX Option Chain (Fidelity (highlight from author)) For some context, SPX, the S&P 500 Index options on those same August 15, 2025, options are showing implied volatility of around 16%. For YBTC, the 49.1% distribution rate is also an eye-catching rate. Of course, that distribution yield doesn't mean that it is going to be the total returns. As we've seen, the fund launched around $50 a share and is now down closer to $46. So some of the distribution is simply resulting in share price/NAV erosion. For 2024, the entire distribution was classified as ordinary income dividends as well, making it less tax-efficient. This year, it is estimated through the Form 19a to be mostly return of capital. That would make it much more tax-friendly and make it similar to the other funds, where they also see meaningful portions of the distributions characterized as ROC. ROC can defer tax because it reduces an investor's cost basis, so taxes would only potentially be due when selling out of a position. Conclusion YBTC is another offering in the BTC space that seeks to create an 'income' that can be paid to investors via an options strategy. YBTC and YBIT are similar in their options-only approach, but both have lagged BTCI. YBTC to a significantly lower margin when compared to YBIT, but still a rather meaningful degree. I don't believe this is specifically the result of an options-only strategy versus options and holding an ETF. Rather, this is going to be more specific to how overwritten the portfolios are. YBTC's distribution rate currently comes to around 49%, YBIT is at around 46.5%, and BTCI comes in at a meaningfully lower 28%. This is still a massive distribution rate, of course. I'd also reiterate that once again, a distribution rate does not equal total return. Anyway, it indicates that BTCI is more flexible in what notional value they are overwriting their portfolios at. With YBTC and YBIT, they are nearly 100% overwritten to generate as much option premium as they can. BTCI, on the other hand, produces a relatively smaller amount of premium but can then provide more upside potential. With the latest overwrite as of the time of writing, at roughly 55%. When BTC is in a rising trend, as we've seen, writing against the portfolio to a smaller degree means they aren't going to be as capped on the upside. With the NEOS fund gathering a materially larger amount of AUM and with BTCI's inception later than its competitors, clearly investors are taking notice. Perhaps the other funds could lean into being more flexible, giving up some of that higher distribution yield in favor of higher upside participation when the environment warrants it. With that said, I think BTCI takes the win again here.
