YieldMax Introduces FIAT ETF to Hedge Against Coinbase

YieldMax has revealed that it will be releasing its new Exchange-Traded Fund, the FIAT ETF, on NYSE Arca. This fund aims to provide short exposure to the share price of Coinbase Global Inc., the predominant cryptocurrency exchange in the United States.

YieldMax Introduces FIAT ETF

YieldMax is launching its Short COIN Option Income Strategy ETF, which is intended to offer inverse exposure to Coinbase’s stock. As per the summary prospectus, the fund will employ a synthetic covered put strategy to accomplish this goal.

This includes the purchasing of put options, writing of call options on COIN stock and short put options with strike prices that are at 0-15% below the current prices to earn income.

YieldMax™ Short COIN Option Income Strategy ETF $FIAT launching tomorrow, 7/10.$FIAT provides short exposure to #Coinbase and aims to generate monthly income from a #coveredputselling strategy on $COIN.

See details below and @ https://t.co/GkowckHOU8 https://t.co/ehE5cWLplU pic.twitter.com/HYvSSFeRA3

— YieldMax ETFs (@YieldMaxETFs) July 9, 2024

However, the prospectus warns that the upside is that the fund will only be able to reap gains from a decline in the COIN stock price if there is not much drawdown because losses can be incurred from short put positions.

Market Strategy and Potential Risks

The FIAT ETF is designed to capitalize on Coinbase’s stock decline while also generating passive monthly income. However, there are some risks involved in the strategy even with the innovation.

If, however, the stock price of Coinbase goes below the strike price then the fund may face some losses which may affect the potential profit from the synthetic short position. The statistics reveal that Coinbase’s stock has appreciated by 173% within the last one year and 45% so far this year even despite Bitcoin pulling back in the recent crypto market sell off.

The launch of the FIAT ETF is a part of the developing process of the new generation of financial instruments based on cryptocurrencies. This trend has accelerated with the launch of bitcoin spot ETFs in January and other strategies, including Roundhill’s Bitcoin-covered call strategy ETF that targets return via options.

YieldMax’s Expanding Portfolio

YieldMax is also increasing its presence in the ETF market. Recently, the firm applied for an Ether Option Income Strategy ETF that will employ the synthetic covered call strategy to capture the volatility of the Spot Ethereum ETFs for the investors’ gains.

This comes after the company launched its Bitcoin Option Yield Strategy ETF (YBIT) last year.

Nevertheless, the Ether Option Income Strategy ETF is not going to include the fundamental investment in Ethereum or any other Spot Ethereum ETF. However, Tidal Investments will oversee the management of the fund while ZEGA Financial will offer sub-advisory services.

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