Ethereum News Today: Investors Get Paid to Ride Ethereum's Volatility with Grayscale's New ETF

Grayscale Investments has introduced the Grayscale Ethereum Covered Call ETF (ETCO), an actively managed exchange-traded fund designed to provide investors with income while maintaining exposure to Ethereum, the second-largest cryptocurrency by market capitalization. Launched on September 4, 2025, the ETF is listed on NYSE Arca and trades under the ticker ETCO. The product is part of Grayscale’s expanding suite of income-focused digital asset strategies, building on its Bitcoin Covered Call ETF (BTCC) and Premium Income ETF (BPI) models.

ETCO’s investment strategy revolves around the systematic writing of call options on Ethereum ETPs, including the Grayscale Ethereum Trust ETF (ETHE) and Grayscale Ethereum Mini Trust ETF (ETH), to generate income from the premiums collected. These premiums are intended to be distributed to shareholders on a biweekly basis. The fund’s primary objective is to provide current income, with a secondary aim of participating in the returns of Ethereum. By employing this covered call strategy, ETCO offers an “income-first” approach tailored for investors seeking a steady cash flow while retaining exposure to Ethereum’s price movements.

According to the fund’s prospectus, ETCO carries a total expense ratio of 0.66%, aligning it with Grayscale’s broader lineup of ETPs. As of the inception date, the fund’s net asset value (NAV) per share was $35.01, with assets under management totaling approximately $1.4 million. Shares outstanding stood at 40,000, and the fund trades at a 0.00% premium or discount to NAV. The fund is actively managed and does not directly invest in digital assets but instead uses derivatives to gain indirect exposure to Ethereum-linked ETPs.

The launch of ETCO coincides with a surge in interest in Ethereum-based products, particularly spot ETFs, which began trading in the U.S. in 2024. Ether has outperformed Bitcoin this year, gaining 34% year-to-date compared to Bitcoin’s 20%. Institutional and retail investors have increasingly turned to Ethereum-based products, with ETH ETFs attracting significant inflows in August. ETCO aims to provide a structured way for investors to benefit from Ethereum’s price volatility while mitigating some of the associated risks through its options-based strategy.

However, as with all covered call strategies, ETCO involves trade-offs. While it generates income and potentially reduces downside risk, it also caps potential upside during sharp price rallies. Investors should be aware that the fund’s performance is subject to a range of risks, including derivative instruments, volatility in digital assets, and liquidity constraints in the Ethereum ETP options market. Additionally, the fund’s indirect exposure to Ethereum means it may not fully track the price of the underlying digital asset.

ETCO is the latest addition to Grayscale’s offerings, reflecting the firm’s ongoing strategy to innovate within the digital asset space. The product is intended for investors who already hold Ethereum exposure and are seeking to add an income component through a systematic, options-based approach. With Ethereum’s market momentum and broader adoption across Wall Street, ETCO represents a strategic response to the growing demand for structured, outcome-oriented crypto products.

Source:

[1] Grayscale Investments Launches Ethereum Covered Call ETF (https://finance.yahoo.com/news/grayscale-investments-launches-ethereum-covered-154057923.html)

[2] Grayscale Launches Ethereum Covered Call ETF as Money Rushes into ETH Funds (https://www.xt.com/en/blog/post/grayscale-launches-ethereum-covered-call-etf-as-money-rushes-into-eth-funds)