Create an income producing Covered Call.
If you like to trade volatility, then BITX is for you. BITX is a leveraged Bitcoin-linked ETF that aims to provide daily investment results that correspond to twice the daily performance of the S&P CME Bitcoin Futures Daily Roll Index With an IV30 of 136.90, (SPY is 14.78 as a comparison), you will find selling the option premiums advantageous. Consider this Covered Call idea using the price of BITX on April 22, 2024. Buy 100 shares of BITX @ $44.82, and at the same time, Sell to Open 1 Call, strike $45, price $2.19, expiring April 26, 2024. Your net cost of the trade is $4,263,00. If BITX is $45.00 or higher at the market close on April 26, your shares will be sold at $45.00 leaving you a profit of $237.00. This is a 5-day return of 5.29%, annualized at 275% (for comparison purposes). If BITX is below $45 you keep the shares and the $219,00 premium. The cost basis will be $42.63 per share. You can sell the shares anywhere above $42.63 for a profit, or you can sell another Call for additional income and possible net cost reduction.
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