BlackRock Launches New Bitcoin ETF Combining BTC Exposure With Covered Call Income

Bitcoin Magazine

BlackRock Launches New Bitcoin ETF Combining BTC Exposure With Covered Call Income

BlackRock today launched the iShares Bitcoin Premium Income ETF (Nasdaq: BITA), a new exchange-traded product that holds spot bitcoin and shares of the iShares Bitcoin Trust ETF (IBIT) while selling call options on a portion of those holdings to generate monthly income for investors.

The fund writes call options on roughly 25% to 35% of its IBIT holdings, collecting option premiums that are distributed to investors each month. 

The structure preserves the bulk of bitcoin exposure, allowing participation in price appreciation while producing an income stream — a combination that BlackRock says a growing portion of its client base has requested.

“A significant segment of our client base is interested in bitcoin but is also highly focused on income generation,” said Robert Mitchnick, Head of Digital Assets at BlackRock. “BITA was built in response to that demand, enabling investors to retain the majority of their bitcoin upside exposure while capturing potential income through a convenient exchange-traded structure.”

A covered call strategy involves holding an asset and selling call options against a portion of that position to collect premium income. 

In sideways or mildly bullish markets, these premiums boost returns. In strong bull markets, upside on the covered portion is capped because issuers must sell at the option’s strike price.

BITA gains its bitcoin exposure through both direct spot BTC holdings and IBIT — the world’s largest bitcoin ETP, which has accumulated nearly $49 billion in assets since its January 2024 debut. IBIT’s options market averages $3.7 billion in daily trading volume and ranks among the top 1% of all options products by that measure, a scale that BlackRock says is essential to executing the strategy at institutional quality.

The fund carries a 0.65% sponsorship fee — higher than IBIT’s 0.25%, but lower than other income-generating bitcoin ETFs such as Roundhill’s YBTC and NEOS’ BTCI.

Earlier today on Bloomberg, BlackRock executive Rick Rieder said, “I think bitcoin is ultimately going considerably higher.”

Tax structure sets BITA apart

BITA’s structure holds bitcoin and IBIT for tax-efficient growth while selling options on IBIT that qualify as Section 1256 contracts, subject to the favorable 60/40 tax treatment — 60% long-term and 40% short-term on capital gains from option premium income. 

Investors in the partnership structure may also pass through capital losses to offset gains elsewhere in their portfolios, and both short-term and long-term gains retain capital gains character.

The fund was registered under the Securities Act of 1933 rather than the Investment Company Act of 1940, meaning it operates outside the regulatory framework that governs mutual funds and traditional ETFs.

Who BlackRock is building this for

Jay Jacobs, BlackRock’s U.S. head of equity ETFs, said the fund targets three distinct investor profiles. The first group includes income-focused investors seeking returns beyond dividend stocks and bonds. 

The second consists of bitcoin holders who want cash flow from a long-term position. The third is investors who have stayed away from bitcoin — or gold — because those assets produce no income on their own.

“You could imagine this could be people who have a significant portion of their wealth in bitcoin but would like to have an income stream to support their lifestyle,” Jacobs said to CoinDesk.

Jacobs added that while some IBIT holders may migrate into BITA, the fund is designed to pull in investors who do not currently own bitcoin at all — people for whom income is a prerequisite, not a bonus.

BITA enters a market where covered call bitcoin products are gaining traction. Goldman Sachs filed in April to launch its own Bitcoin Premium Income ETF, an fund that also uses a partial covered call strategy. Bloomberg analyst Eric Balchunas projected Goldman’s product would become effective around July 1.

BITA also extends BlackRock’s dominant position in the digital asset ETP space. The firm captured approximately 90% of all U.S.-listed digital asset ETP flows in 2025 and now oversees more than $130 billion in assets across digital asset ETPs, tokenized liquidity funds, and stablecoin reserve management.

This post BlackRock Launches New Bitcoin ETF Combining BTC Exposure With Covered Call Income first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

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