Asset management firm YieldMax has put to sea an ETF that provides investors short exposure to crypto exchange Coinbase. The fund launched on NYSE Arca under the FIAT ticker today.
FIAT intends to generate income on a monthly basis via a covered put-selling strategy on COIN. The official SEC filing highlighted that the fund’s options contract provides indirect inverse exposure to the share price returns and current income from the option premiums. The filing further highlighted,
“As part of its strategy, the Fund will write (sell) put option contracts on the Underlying Security to generate income. The put options written (sold) by the Fund will generally have an expiration of one month or less (the “Put Period”) and a strike price that is approximately 0%-15% below the then-current Underlying Security’s share price at the time of such sales.”
Here, it should also be noted that If COIN’s share price decreases beyond the strike price, the fund will lose money on those short put positions, and the losses will, in turn, limit the gains of the fund’s synthetic short exposure. Specifically, the filing underlined,
“The Fund’s potential corresponding benefit from decreases in the share price of the Underlying Security is limited.”
While some users revealed plans to buy the ETF's shares for fun, others did not hesitate to express their bearishness and opine how the FIAT would ultimately drop down to zero.
On the short-term timeframes, COIN’s returns have been negative. However, when zoomed out, investors have been fetched with decent gains. Currently trading at $216.86, the stock’s price is up 43% over the past six months, while on the yearly window, it is up 167%.
