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Grayscale, the world's largest digital asset-focused investment platform, today announced the launch of its latest exchange-traded fund (ETF), Grayscale® Ethereum Covered Call ETF (Ticker: ETCO) (the "Fund"). As the second largest investable opportunity in crypto by market cap, Ether represents a compelling diversification play for many investors in digital assets. The Fund is Grayscale's newest ETF offering a covered call writing strategy, designed to provide investors exposure to Ether's volatility characteristics as a unique source of potential income.
"Grayscale® Ethereum Covered Call ETF is designed to complement an investor's existing Ethereum exposure by adding an income component," said Krista Lynch, Senior Vice President, ETF Capital Markets at Grayscale. "We know that investors are all unique with different needs and investment goals, and we're excited to introduce this new ETF as part of our commitment to providing innovative, outcome-oriented solutions that meet them where they are."
Grayscale® Ethereum Covered Call ETF aims to generate current income, with a secondary objective of capturing returns linked to Ether. The Fund seeks to achieve this by using options on Ethereum exchange-traded products (ETPs) that are designed to track Ethereum's price performance, before fees and expenses. The Fund also joins Grayscale's growing suite of income-focused products, including Grayscale Bitcoin Covered Call ETF (Ticker: BTCC) and Grayscale Premium Income ETF (Ticker: BPI), as the firm continues to innovate to serve the widest range of investors.
The options in which the Fund may invest, may include options on each of the Grayscale Ethereum Trust ETF (Ticker: ETHE) and the Grayscale Ethereum Mini Trust ETF (Ticker: ETH). There is no guarantee that the Fund will achieve its investment objective. To pursue its goals, the Fund systematically writes call options near current spot prices, aiming to capitalize on Ether's volatility to generate income, which is then distributed to shareholders.
By writing call options near spot prices, ETCO prioritizes income generation, making it an income-first strategy that may appeal to investors seeking consistent cash flow and high-yield opportunities. The premiums collected through this approach can also help mitigate the impact of market declines, potentially reducing volatility during downturns. The Fund is actively managed, fully options-based, and intends to distribute income on a bi-weekly basis.
For more information about ETCO, please visit: https://etfs.grayscale.com/etco
About Grayscale
Grayscale enables investors to access the digital economy through a family of future-forward investment products. Founded in 2013, Grayscale has a decade-long track record and deep expertise as a digital asset-focused investment platform. Grayscale Advisors, LLC is an SEC-registered investment adviser with the SEC since January 2022. Investors, advisors, and allocators turn to Grayscale for single asset, diversified, and thematic exposure.
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Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Funds, please call (866)-775-0313 or visit our website at etfs.grayscale.com. Read the prospectuses or summary prospectuses carefully before investing.
Grayscale Ethereum Covered Call ETF ("ETCO"), Bitcoin Covered Call ETF, and Grayscale Bitcoin Premium Income ETF (collectively the "Funds") will not invest in digital assets directly. The Funds also will not invest in initial coin offerings. The Funds will, however, have indirect exposure to digital assets by virtue of its investments in derivatives on exchange-traded vehicles that hold digital assets as investments. Because the Funds will not invest directly in any digital assets, they may not track price movements of any digital assets.
Investing involves risk and possible loss of principal. There is no guarantee the investment strategies will be successful. The Funds are considered to be non-diversified. The Funds are actively managed, and their performance reflects the investment decisions that the Adviser makes for the Funds.
Derivative Instruments. The Funds will invest in options, a type of derivative instrument. Derivatives can be more sensitive to changes in interest rates or to sudden fluctuations in market prices than conventional securities, which can result in greater losses for the Funds. In addition, the prices of the derivative instruments and the prices of underlying securities, interest rates or currencies they are designed to reflect may not move together as expected. Derivatives are usually traded on margin, which may subject the Funds to margin calls. Margin calls may force the Funds to liquidate assets.
Options Risk. The use of options involves investment strategies and risks different from those associated with ordinary portfolio securities transactions and depends on the ability of the Funds' portfolio managers to forecast market movements correctly. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument. The effective use of options also depends on the Funds' ability to terminate option positions at times deemed desirable to do so. There is no assurance that the Funds will be able to effect closing transactions at any particular time or at an acceptable price.
Covered Call Option Writing Risk. By writing covered call options in return for the receipt of premiums, the Fund will give up the opportunity to benefit from potential increases in the value of the security above the exercise prices of such options but will continue to bear the risk of declines in the value of the underlying security. The premiums received from the options may not be sufficient to offset any losses sustained from the volatility of the underlying stocks over time. As a result, the risks associated with writing covered call options may be similar to the risks associated with writing put options. In addition, the Funds' ability to sell the securities underlying the options will be limited while the options are in effect unless the Funds cancel out the option positions through the purchase of offsetting identical options prior to the expiration of the written options.
Digital Assets Risk. Digital assets, such as Ether, are assets designed to act as a medium of exchange, though some arguably have not achieved that purpose. Digital assets are an emerging asset class. Digital assets generally operate without a central authority (such as a bank) and are not backed by any government. Digital assets are not legal tender. Federal, state and/or foreign governments may restrict the use and exchange of digital assets, and regulation in the United States is still developing.
Ethereum ETPs Investment Risk. ETCO intends to obtain investment exposure to Ether, indirectly via synthetic exposure to Ethereum ETPs through derivatives. The price of Ethereum ETPs shares may not directly correspond to the price of any digital currency and are highly volatile. Such investment also exposes ETCO to all of the risks related to digital currencies discussed herein. The shares of Ethereum ETPs are not registered under the Investment Company Act of 1940, or any state securities laws, and therefore such an investment will not benefit from the protections and restrictions of such laws.
Of the Ethereum ETPs, ETHE and ETH are sponsored by an affiliate of ETCO's' Adviser that receives a fee in exchange for assuming certain administrative and marketing expenses of ETHE and ETH. While ETCO do not invest directly in ETHE and ETH, ETCO's' strategies may result in additional purchases of shares of ETHE and ETH by options holders, which will benefit the Adviser and its affiliate in terms of the fee being received on these products.
Liquidity Risk. The market for Ethereum ETP options is still developing and may be subject to a period of illiquidity.
New Fund Risk. ETCO is a recently organized investment company with no operating history.
ETCO is distributed by Foreside Fund Services, LLC and Grayscale Advisors, LLC ("GSA") is the adviser. Foreside Fund Services, LLC is not related to GSA or its affiliates
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