Bitcoin exchange-traded funds (ETFs) gained massive popularity in 2024, attracting billions in investor inflows. Now, asset management firms are innovating further by integrating crypto and derivatives into exchange-traded packages.
Calamos to Launch Structured Protection ETF
On Monday, Calamos announced the launch of a new structured protection ETF aimed at providing exposure to Bitcoin's upside while offering 100% downside protection. Slated to launch later this month, the Calamos Bitcoin Structured Alt Protection ETF (CBOJ) builds on the Chicago area firm's suite of exchange-traded funds that offer 100% downside protection on the S&P 500 Index, the Russell 2000 Index, and the Nasdaq Composite Index.
The ETF will combine options on the Cboe Bitcoin U.S. ETF Index with Treasury holdings. Designed to be held for a 12-month period starting Jan. 22, 2025, the fund will provide a capped upside, which will be determined based on options pricing on its launch date. This product introduces the concept of defined outcome strategies, popular in equity ETFs, to the volatile world of crypto investing.
Rising Popularity of Defined Outcome Products
Defined outcome products, such as buffer funds, have seen a surge in demand as investors increasingly seek innovative ways to diversify their portfolios. Their popularity grew notably after the 2022 market downturn, where both stocks and bonds experienced sharp declines. The recent success of bitcoin ETFs, including the iShares Bitcoin Trust ETF IBIT, which surpassed $50 billion in assets in 2024, has further solidified demand for crypto-related financial products. This market enthusiasm coincided with Bitcoin’s record-breaking rally past $100,000 (read: Bitcoin Tops $100K Mark: Will Its ETFs Drive the Next Boom?).
Addressing Investor Concerns Over Bitcoin Volatility
Despite the success of pure-play Bitcoin ETFs, financial advisors remain cautious about Bitcoin due to its history of extreme volatility. According to Matt Kaufman, head of ETFs at Calamos, this volatility has created a demand for risk-managed solutions. Kaufman believes the structured protection ETF will provide a more palatable option for advisors looking to add crypto exposure to their clients’ portfolios. He expects many investors to hold the Calamos fund alongside traditional bitcoin ETFs, combining direct exposure with risk mitigation, as quoted on CNBC.
Other Firms Entering the Market
Calamos is not alone in exploring this new corner of investments. Several other firms are developing similar products to combine cryptocurrency exposure with traditional investment strategies. Innovator and First Trust have filed for funds resembling Calamos’s structured protection ETF, while companies like Grayscale and Roundhill are working on covered call funds that blend bitcoin exposure with income-generating features, per the CNBC article. With the Securities and Exchange Commission expected to take a more crypto-friendly stance under President-elect Donald Trump, more filings are anticipated throughout 2025 (read: After Bitcoin & Ether, Are Ripple ETFs Underway?).
Unique Features of the Calamos Fund
The Calamos fund is designed to be held for a fixed period of 12 months, spanning from Jan. 22, 2025, to Jan.31, 2026. Its options-based structure means investors who sell early may not realize the full benefits of a bitcoin rally and could even incur losses. Additionally, Calamos plans to introduce “floor” funds offering 90% and 80% downside protection, which would allow for some initial losses in exchange for greater upside potential. Kaufman highlighted that the unique distribution of bitcoin returns—characterized by either extreme losses or significant gains—renders traditional buffer fund strategies ineffective.
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