NEOS Bitcoin High Income ETF: Leveraging Call Options for High Yields in a Volatile Market

The article discusses the NEOS Bitcoin High Income ETF, which utilizes a call option strategy to generate double-digit yields. The ETF's performance is highlighted, with Bitcoin (BTC-USD) increasing by 75.73% over the past year to $117,366. The article also mentions that Bitcoin is perceived as a store of value by many investors, despite its large fluctuations in share price.

The NEOS Bitcoin High Income ETF (BATS:BTCI) has emerged as a promising investment vehicle for income-seeking investors, leveraging the volatility of Bitcoin to generate substantial yields. Launched in October 2024, BTCI has quickly gained attention for its innovative strategy, which involves selling call options on Bitcoin futures ETFs to generate premium income.

Bitcoin (BTC-USD) has experienced significant growth over the past year, increasing by 75.73% to reach $117,366 [2]. This growth has been driven by Bitcoin's status as a store of value, despite its large fluctuations in share price. The NEOS Bitcoin High Income ETF capitalizes on this volatility by employing a synthetic covered call strategy.

BTCI's strategy involves investing in exchange-traded spot Bitcoin ETPs and utilizing an option overlay strategy. This strategy includes selling call options on Bitcoin futures ETFs to generate recurring monthly income. The ETF aims to benefit from Bitcoin's price appreciation while limiting its upside potential to generate income [1].

Since its inception, BTCI has delivered impressive returns. As of July 2025, the ETF has generated an annualized yield of approximately 27%, with a 7% year-to-date (YTD) return and $9.98 in distribution income for the year [2]. These yields are significantly higher than traditional ETFs, making BTCI an attractive option for investors looking for high income.

However, BTCI's high yield comes with substantial risks. The ETF's performance is closely tied to Bitcoin's volatility and price movements. Sharp declines in Bitcoin's value could erode the ETF's net asset value (NAV) and disrupt its dividend sustainability. Additionally, BTCI's strategy involves selling call options, which can limit the ETF's upside potential during market rallies.

For investors seeking a balance between yield and stability, the NEOS Bitcoin High Income ETF offers a compelling option. However, it is essential to conduct thorough due diligence and understand the risks associated with investing in a single, highly volatile asset like Bitcoin.

References

[1] 247 Wall St. (July 26, 2025). Unlock a 22% Yield with This Bitcoin-Powered Covered Call ETF. Retrieved from https://247wallst.com/investing/2025/07/26/unlock-a-22-yield-with-this-bitcoin-powered-covered-call-etf/

[2] Seeking Alpha. (2025). NEOS Bitcoin High Income ETF Utilizes a Call Option Strategy to Generate Double-Digit Yields. Retrieved from https://seekingalpha.com/article/4805912-neos-bitcoin-high-income-etf-utilizes-a-call-option-strategy-to-generate-double-digit-yields