Grayscale, the world’s largest digital-asset investment platform, today rolled out its latest exchange-traded fund: the Grayscale® Ethereum Covered Call ETF (Ticker: ETCO). The actively managed fund uses a covered-call writing strategy intended to generate current income while maintaining a link to Ethereum’s price performance, a pitch aimed at investors who want Ethereum exposure with an income component.
Ethereum, the second-largest investable crypto by market cap, is described by Grayscale as a “compelling diversification play” for digital-asset allocations. ETCO seeks to turn some of Ethereum’s volatility into potential yield by systematically writing call options near current spot prices on Ethereum exchange-traded products (ETPs) that track the token before fees and expenses.
“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.”
Expanding Suite of ETFs
According to Grayscale, the Fund may invest in options tied to Grayscale’s own Ethereum ETPs, specifically the Grayscale Ethereum Trust ETF (Ticker: ETHE) and the Grayscale Ethereum Mini Trust ETF (Ticker: ETH). The premiums collected from writing those calls form the Fund’s primary income source and are intended to be distributed to shareholders on a bi-weekly basis.
ETCO is positioned as income-first: by selling call options close to the prevailing market price, the strategy prioritizes regular cash flow and aims to soften the impact of down markets through option premium collection. Grayscale notes there is no guarantee the Fund will meet its objectives, and investors should be aware that the approach may cap upside participation in strong rallies because written calls can limit gains above strike prices.
The launch adds ETCO to Grayscale’s expanding suite of income-focused ETFs, which already includes the Grayscale Bitcoin Covered Call ETF (Ticker: BTCC) and the Grayscale Premium Income ETF (Ticker: BPI). The firm says these products reflect its ongoing push to offer outcome-oriented tools for a wide range of investor needs, from growth-oriented crypto exposure to strategies that emphasize yield.
ETCO is actively managed and fully options-based, and it will distribute income on a bi-weekly schedule. As with all investment products, prospective investors should review the Fund’s prospectus for risks, fees and detailed strategy mechanics before allocating capital.
