Wave Financial Launches Yield Fund Based On Cryptocurrency Derivatives

October 1, 2019 | Digital Assets, Investments, News

Wave Financial is addressing the fast-developing interest in options strategies in the cryptocurrency sector with its Wave Bitcoin (BTC) Income and Growth Digital Fund.

The Wave Financial fund will hold reserves of Bitcoin (BTC) in the custody of Fidelity Digital Assets. The fund will generate income by earning premiums from selling call options on the fund’s BTC reserves with strikes 20% or more above the current BTC trading price. Moreover, this options strategy also leaves room for investors to earn some potential BTC upside, said the company.

Wave Financial: Investors love innovative yield capturing strategies

“For high net worth investors, appetite for innovative yield product with upside potential is strong,” said Benjamin Tsai, President of Wave Financial. “This product monetizes higher volatility of BTC to deliver yield, independent of the interest rate environment while keeping some upside exposure.”

Wave intends to distribute a monthly dividend of 1.5% of Net Asset Value per month. Further, any excess above an annual distribution of 18%, minus performance fees, will go towards the purchase of more BTC.

Meanwhile, cryptocurrencies options will be in the limelight once CME Group starts offering options on bitcoin futures in early 2020.

Bitcoin $100,000? Grab a call option

In July this year US regulated derivatives exchange LedgerX offered a unique call option. The option would be in the money if bitcoin rose to $100,000 by December 2020.

“Dozens and dozens of these institutions got back to us saying we’d be interested in trading a contract like this,” said LedgerX Chief Executive Officer Paul Chou to Bloomberg. “I understand $100,000 is a large number, but a lot of us who’ve been in this space remember Bitcoin at $1, and then it hit $10 and $100 and $10,000. A $100,000 contract doesn’t even make us blink.”

However, BTC is currently trading at only $8,378.

Wave Bitcoin (BTC) Income and Growth Digital Fund Fee Structure

Finally, the new Wave Financial fund will levy management fees of 100 basis points. However, it will charge a performance fee of 30% of returns over and above the 18% yield.

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