Grayscale Investments has introduced a novel exchange-traded fund structured to provide yield from Ethereum price movements. The Grayscale Ethereum Covered Call ETF (ETCO) launched on September 4, 2025, and employs a covered call strategy on underlying Ethereum trusts instead of direct ETH holdings. This approach involves writing call options near spot prices on established products, including the Grayscale Ethereum Trust (ETHE) and the Ethereum Mini Trust, to capture premium income that is distributed to shareholders.
ETCO distributes dividends every two weeks, prioritizing regular income over pure price appreciation. By collecting option premiums, the fund seeks to enhance yield opportunities for investors while potentially reducing portfolio volatility during price declines. This income-first orientation may appeal to those seeking a cash flow component in their digital asset exposure.
Krista Lynch, Senior Vice President for ETF Capital Markets at Grayscale, emphasized that ETCO is designed to complement, rather than replace, existing ETH allocations. She noted that the fund’s structure aligns with Grayscale’s broader strategy of providing tailored products for varied investor objectives. At inception, ETCO reported a net asset value of $35.01 per share, with approximately 40,000 shares outstanding and over $1.4 million in assets under management.
The introduction of ETCO reflects growing demand for income-generating strategies within the cryptocurrency sector. As Ethereum outflows persist in traditional ETFs, innovative structures like covered call funds offer alternative avenues for investors to harness market volatility. Market observers will track ETCO’s performance metrics, including option premiums collected, dividend yields, and risk-adjusted returns, to assess its impact on broader Ethereum investment frameworks.
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