Summary Roundhill Bitcoin Covered Call Strategy ETF uses complicated option strategies on Bitcoin. YBTC’s holdings are primarily US Treasury bills, with complex options positions rather than traditional covered calls on Bitcoin ETFs. We go over the return profile to illustrate why most covered call funds don't pass our tests. Today, we will focus on Roundhill Bitcoin Covered Call Strategy ETF ( YBTC ). According to their website, this is what it does. The Roundhill Bitcoin Covered Call Strategy ETF is the first U.S. listed bitcoin covered call ETF. 1 The Fund offers exposure to exchange-traded products (“ETPs”) that have direct exposure to bitcoin * , subject to a cap, while providing the potential for current income. YBTC is an actively-managed ETF. Source: Roundhill The fund does not directly "invest" (we have to use the quotes here) in Bitcoin but uses exchange-traded products. When we read that, we thought it might just hold a Bitcoin ETF and then sell calls on that. You probably thought the same. Instead, when we examine the holdings, they present a drastically different picture. YBTC Their current AUM is around $224 million, so the entire AUM is invested in US Treasury bills. A tiny portion is also invested in Government Treasury mutual fund ($143,176), and some is held as cash ($798,464). The actual bitcoin-related holdings are strange, to say the least. Here's the first one. YBTC This appears to be a purchased call option. Normally with covered call funds, you would expect to see the underlying ETF, which in this case is iShares Bitcoin Trust ETF ( IBIT ), and then a call sold. So this would then appear with a negative sign. A purchased call is the opposite of what you would expect these funds to do. This is also right at the money ($49.72 strike) and close to expiration (Jan 16, 2026). Seeking Alpha So if Bitcoin stays here, the entire premium evaporates. That would be a 3.4% loss in one month on equity/AUM. But it gets more interesting. Against that purchased call, there is a sold call. This expires on January 2, 2026, and is of a higher strike price of $51.30. YBTC So the fund has created a long calendar call spread. Not something you would see in a typical covered call fund. This then brings us to our final position, which is one where significant premiums are sold. The fund has 45,048 contracts of the $49.72 put. YBTC For those that are unaware, cash-secured puts are identical to covered calls, adjusted for market interest rates. So if you sell a cash-secured put and in the interim park your money in a Treasury bill, you should get the same return profile as buying the stock and selling the identical strike covered call. There are some nuances depending on dividends and early exercise probabilities, but that all is not something we have to even think about with Bitcoin. So the overall position here is strange in some ways, as the fund did cash-secured puts for Bitcoin and then used that money to buy calls, partially offset by a calendar spread. Of course this is all just a moment in time, so we have no idea how this strategy has been changed over the course of the fund's history. What we do have is the pudding, where we can look for the proof. The Pudding If you run the price return profiles of IBIT and YBTC, you get a rather glaring contrast. Data by YCharts Of course the investor is now going, "Wait, you didn't count my fat dividend checks." We get that, and we will get to that. We always like to see this part first, as it gets to this decay principle where funds struggle to make the same dollars they did on day one as their NAV goes down. Now, there are some income investors who feel the rules of math don't apply. They seem to believe a fund with a $100 NAV per share can generate the same income even after its NAV drops 50%. But we made it past fourth grade (on the second attempt), so that is not a problem for us. Getting back to the total returns, we see that YBTC has been a real problem child here, lagging IBIT by a lot since inception. Data by YCharts That is a lot of ground to give up. The truly fascinating aspect about this fund is that it has delivered worse total returns in the recent bear market. Data by YCharts That's right. The fund has actually lagged IBIT during a rather steep drop. Verdict You couldn't pay us to speculate on Bitcoin. But if you are doing that, buy Bitcoin or IBIT and do your own covered calls. There are ways to do this intelligently that reduce your risk and improve your returns. Funds focused on generating income tend to miss the forest for the trees. There is too much emphasis on selling premiums rather than asking whether it is the right time to sell premiums. At the minimum, such funds should outperform strongly during bear markets to justify the loss of upside. You have to deliver on Sharpe if you can't deliver on Beta. Based on our opinion on Bitcoin and covered call funds and the data we have seen on this fund, we rate this a Strong Sell. Please note that this is not financial advice. It may seem like it, sound like it, but surprisingly, it is not. Investors are expected to do their own due diligence and consult a professional who knows their objectives and constraints. Most of our articles are not written for "buy and hold" investors. Our articles are not written for investors who ignore capital preservation while focusing only on yield.
