Calamos to Launch Bitcoin ETF Focused on Risk-Free Investment Strategy

Highlights:

• Calamos will launch a Bitcoin ETF this month with 100% downside protection.
• The ETF also includes a combination of Treasuries and options to hedge the volatility of Bitcoin.
• Investors will gain risk-controlled exposure with annual protection resets and new upside caps.

Calamos Investments is introducing CBOJ, a Bitcoin ETF that has 100% downside protection. Debuting on the Chicago Board Options Exchange (CBOE) on January 22, 2025, this innovative fund aims to tackle Bitcoin’s volatility, in addition to the promise of growth.

CBOJ is an extension to the Calamos Structured Protection ETF series which was launched in 2024. These earlier funds offered one hundred percent protection on the downside risk for major indices like the S&P 500, Nasdaq-100, and Russell 2000. The firm’s latest product uses the same structure but replaces Treasury holdings with options on the CBOE Bitcoin US ETF Index.

Capture #Bitcoin’s growth potential with $CBOJ, the world’s first 100% downside protected (over one year) #BitcoinETF, listing Jan. 22.

Read the press release: https://t.co/gcnejyeoTf pic.twitter.com/VVEKXnQyYd

— Calamos Investments (@Calamos) January 6, 2025

Addressing Bitcoin Volatility

Cautious investors have often been deterred by Bitcoin’s extreme volatility. To address this risk, CBOJ will seek to protect investors from loss, regardless of future downturns in the value of Bitcoin. The fund is aimed at addressing the needs of advisors, institutions, and investors seeking growth potential without taking on that much risk, according to Matt Kaufman, Head of ETFs at Calamos.

The ETF attains its protective structure by way of resetting every year. Every year, investors get a new upside cap and full downside protection for the next one year. Kaufman noted that the fund allows investors to get exposure to Bitcoin with some risk management. Furthermore, the fund will coexist with other pure-play Bitcoin ETFs in their funds.

How the Fund Operates

CBOJ uses both U.S. Treasury bonds and options linked to the CBOE Bitcoin US ETF Index. This regulated approach provides the necessary disclosure and minimizes the risks associated with holding the cryptocurrency directly. Investors willing to hold the fund for the entire 12-month period will benefit from the annual reset, which fits the fund into a new market environment.

The ETF presents a defined outcome approach known in the equity markets and applied to the risks inherent in cryptocurrencies. Kaufman indicates that Bitcoin’s return distribution varies from that of the traditional indices, thus calling for a unique approach to structured funds. While equity-focused buffer funds use a combination of partial buffers, CBOJ opts for full downside protection aligning with the high volatility of Bitcoin.

Expanding Structured Solutions

Calamos plans to launch new funds with different degrees of protection, including options with 90% and 80% protection. These options will let the investors take small losses in the beginning but get higher returns in the future.

The launch of CBOJ comes at a time when investors are actively welcoming Bitcoin ETFs into the market. Bitcoin ETFs in the spot market experienced tremendous growth in 2024. This led to institutional investments flooding the market, pushing Bitcoin prices to new levels. This growth has led asset managers to consider developing new derivatives-based strategies that would help to tap into the risk-averse investor base.

Calamos’ move to launch Bitcoin ETF is in line with a larger industry trend of incorporating cryptocurrency exposure into managed risk investment solutions. Other competitors, such as Innovator and First Trust, are also coming up with similar products. These products include Bitcoin-focused funds that also offer income-generation strategies such as covered calls.