Summary YBIT offers a high monthly yield through a dynamic options approach, but its complexity could make it less suitable for some portfolios. Its dynamic structure and higher yield (over 40%) make it intriguing but prone to NAV erosion. This is why it’s better to treat it as a tactical tool for spot trades. It has high costs but is still fairly liquid despite its low AUM. Despite remaining high‑NAV‑erosion‑risk solutions, among the high‑income Bitcoin options, BTCI seems to offer more NAV protection. “But did you know that Bitcoin can become a yield‑generating asset?” That was the opening remark from a colleague of mine, someone “purely” from the banking world, just back from a road show of his network. He then told me about YieldMax™ Bitcoin Option Income ETF ( YBIT ) : first, it made me reflect on how here on Seeking Alpha we stay one step ahead when it comes to “financial engineering”; then, on how option income strategy ETFs are becoming an increasingly popular component, even in institutional circuits; and finally, on how little people actually understand what we’re talking about. My opinion? Yes, the strategic approach proposed by YBIT is interesting, but it’s not suitable for every type of portfolio, and, above all, it’s a step behind other solutions: in my view, BTCI positions itself better. But before explaining why, you need to know that … The Vision Of … YieldMax is always very clear : the primary goal is to create a current monthly income. Tracking Bitcoin , we could say, is a sort of side question for the management. Data by YCharts And I have to say, the way they achieve this goal is more articulated than what has been done with other ETFs: simply because it’s “dynamic.” That is, they don’t use a single strategy; instead, they have a book of alternatives, and in this it reminds me a bit of LFGY , a YieldMax ETF that I honestly appreciate. According to the prospectus , YBIT can make use of synthetic covered calls: buying calls + selling puts to replicate the underlying ETP without physically owning it. But also the classic standard covered call writing, selling out‑of‑the‑money calls (0%–15% above the current price), as well as opportunistic credit call spreads, meaning in certain cases they sell calls and buy higher calls to capture part of the additional upside. All this with intensive use of FLEX options (customized options) and collateral in U.S. Treasury securities with maturities from 6 months to 2 years. synthetic covered calls classic standard covered call opportunistic credit call spreads Let me say it: a book of strategies that almost seems to tell the investor, “trust our management, we will manage to profit through various market phases.” That semi‑active management that often, however, is an illusion of security . But let’s get straight to the point… is it really so? Partly Yes, But… First of all, this “multi‑strategy option” approach has a cost: 4.76% when adding up the various items. A factor that certainly cannot be ignored. YBIT - Fund Profile (Seeking Alpha) And it has a low AUM of $147M, which shifts my concern to liquidity. A concern that is unfounded, because the bid/ask spread is 0.09%, therefore quite tight, and surprisingly, the average daily volume is over 930% higher than the average: so the slippage risk is reduced compared to other ETFs with that level of AUM. YBIT - Liquidity Grade (Seeking Alpha) But costs are secondary, and what we care about is performance: a variable element by definition, even though the yield since inception has been pleasantly steady, especially in distributions. As of now we are talking about a TTM yield of around 78%, paid monthly. A distribution that, judging from the 19a filings , is 97% ROC and only 2.59% income. YBIT - Dividend Grade (Seeking Alpha) Considering that the SEC yield is 1.54%, it means the income naturally comes from option premiums. So, in my view, to really understand whether the multi‑strategy approach is or isn’t an “illusion of security,” I look at the holding distribution. Today’s Composition Is Not The Same As Yesterday’s (Or Tomorrow’s) But this is exactly its strength. The strategy changes, theoretically adapting to market conditions: in other words, it addresses one of the main criticisms, the statistical limits of buy‑write (covered call strategy). It’s therefore impossible not to mention the constant rolling of options and the high turnover (28% in the first half) along with high implicit costs. Today, its composition is this: YBIT - Holding distribution (Seeking Alpha) ~50% options on IBIT ~45% Treasury Bills and Notes~1.7% Money Market FundCash & Other negative (–0.55%) Peer Analysis: The Illusion Of Security Quick thought: this dynamism gives YBIT a hedge. In the end, why not? Theoretically, it makes sense. The problem is that there is a chasm between theory and practice. Let me explain: Let’s suppose an investor is interested in adding an ETF of this type to a portfolio, presumably to optimize cash flows and indirectly track, through total return, at least the performance of BTC, because they are a strong supporter of the decentralized market. Is YBIT the most suitable solution? In this sense, it may help to know that, beyond YBIT, there are two other solutions worth considering: YBTC and BTCI. YBIT - YBTC - BTCI : Fund profile (Seeking Alpha) Peer YBTC: For the strategy, it uses ETFs on Bitcoin. It has a less dynamic structure , but in my opinion, it is similar to YBIT. With a medium‑aggressive distribution of about 42% annually (naturally variable), and a weekly distribution. YBTC - Fund Profile (Seeking Alpha) BTCI: it uses a Cayman subsidiary to hold Spot Bitcoin ETPs up to 25% of assets. It has a more conservative capital distribution compared to the first two, with a declared target of 25–30% annually in the prospectus, deliberately contained to preserve NAV (still actively managed, but there seems to be less flexibility in the strategies). It uses index options with Section 1256 treatment. BTCI - Fund Profile (Seeking Alpha) Risk And My Opinion What to choose? A superficial answer: excluding YBTC, because it is very similar to YBIT, the most obvious answer is YBIT, given that it has a yield of more than three times BTCI’s target. Yet, in my view, over the long term it would be a less balanced solution. My choice? With the same total return, I believe choosing the more conservative capital approach also optimizes cash flows over time (simply put, the yield leverages a larger principal). And since BTCI’s yield is still high (over 25%), I prefer BTCI. YBIT, YBTC, BTCI : Price return (Seeking Alpha) But Beware The multi‑strategy approach changes the picture; I told myself: the management might actually succeed in setting up a truly conservative multi‑strategy approach during periods of strong BTC swings, both negative and positive. This could lead YBIT’s performance to distance itself from BTCI’s. YBIT - YBTC - BTCI: Total return (Seeking Alpha) Conclusion But concretely, I prefer a solution that, regardless, manages better to preserve NAV, even though, clearly, this is not easy with BTCI either, especially over the long term and especially with option‑income‑oriented ETFs. In the end, these ETFs are like a scale: if you add too much weight to distributions, in my view these ETFs stop being core or long‑term satellite components of a portfolio and become tactical and strategic allocations for certain market phases. And YBIT, in my opinion, fully represents this setup, which is why, if I had to think of a yield‑generating alternative to Bitcoin to optimize income distribution, I would rather opt for solutions with more conservative NAV management and lower costs: in this sense, BTCI.
